Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 19, Problem 14CQ
(a)
To determine
The exports and imports of Country U’s economy with Country J and Country C.
(b)
To determine
The reason for persistent
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Students have asked these similar questions
Suppose the US goes into a recession where the economy is not growing very quickly (or is actually shrinking) while the economies of our trading partners remain strong. What will most likely happen to our trade deficit? In your answer, explain what will happen to US exports and US imports and why.
Suppose that during a recent year for the United States, merchandise imports were $2 trillion, unilateral transfers were a net outflow of $0.2 trillion, service exports were $0.2 trillion, service imports were $0.1 trillion, and merchandise exports were $1.4 trillion.
a. What was the merchandise trade deficit?
b. What was the balance on goods and services?
c. What was the current account balance?
Over the past four years, the US trade deficit has
increased to $576.9 billion. Based on your
understanding of what it means to have a trade
deficit, is this number too large? Why or why not?
What are the implications for the short-term and
long-term US economy?
Chapter 19 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- In recent decades, has the U.S. trade balance usually been in deficit, surplus, or balanced?arrow_forwardIf the trade deficit of the United States increases, how is the current account balance affected?arrow_forwardDoes a trade surplus mean an overall inflow of financial capital to an economy, or an overall outflow of financial capital? What about a trade deficit?arrow_forward
- Suppose that during a recent year for the United States, merchandise imports were $2 trillion, unilateral transfers were a net outflow of $0.2 trillion, service exports were $0.2 trillion, service imports were $0.1 trillion, and merchandise exports were $1.4 trillion. What was the merchandise trade deficit? What was the balance on goods and services? What was the current account balance?arrow_forwardHow do you think a fluctuation in foreign exchange rates affect trade?arrow_forwardWhat are the likely reasons of large trade deficit in Pakistan? How would you compare the trade of Pakistan with other countries in the region?arrow_forward
- What will happen to the US trade deficit if the US is in a recession while our trading partners are strongarrow_forwardHow a devaluation may reduce the trade deficit of a country? What condition is required to reduce trade deficit? If this condition is not met , what type of effect may arise?arrow_forwardIf you observed a country with a rapidly growing trade surplus over a period of a year or so,would you be more likely to believe that the country's economy was in a period of recession or of rapid growth? Explain.arrow_forward
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