1. Is the United States currently in a trade deficit or a trade surplus situation? 2. What is the most recent amount of deficit or surplus? 3. There's a time between July 2008 and February 2009 when the value of the trade deficit changed substantially. Did the trade deficit increase or decrease during this time?
1. Is the United States currently in a trade deficit or a trade surplus situation? 2. What is the most recent amount of deficit or surplus? 3. There's a time between July 2008 and February 2009 when the value of the trade deficit changed substantially. Did the trade deficit increase or decrease during this time?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Trade Balance: Goods and Services, Balance of Payments Basis**
This graph illustrates the U.S. trade balance from the early 1990s to 2023. The trade balance measures the difference between the value of exports and imports of goods and services. The graph is plotted with the trade balance in millions of dollars on the vertical axis, ranging from -120,000 to 0, and time on the horizontal axis, from 1992 to 2023.
**Key Observations:**
1. **Overall Trend**: The trade balance has generally been in deficit, meaning imports have exceeded exports over this period. The deficit appears to be increasing, especially noticeable from the late 1990s to the mid-2000s.
2. **Significant Changes**:
- Between 2000 and 2006, the trade deficit widened substantially, reaching lows close to -80,000 million dollars.
- From July 2008 to February 2009, the trade deficit decreased significantly. This period coincides with the global financial crisis, which likely impacted trade volumes.
3. **Recent Data**: The graph shows a sharp decline in the trade balance deficit around 2020, possibly due to disruptions caused by the COVID-19 pandemic, followed by some recovery.
**Questions for Exploration:**
1. **Current Situation**: Is the United States currently in a trade deficit or a trade surplus situation?
2. **Most Recent Deficit/Surplus**: What is the most recent amount of deficit or surplus recorded?
3. **Historical Change**: During the period between July 2008 and February 2009, the trade deficit decreased substantially. What factors might have contributed to this change?
**Sources**: Data sourced from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis.
Expert Solution
Step 1: Meaning
Trade Defecit = It is a situation in which a country imports are more than its exports. When a trade deficit exists, net exports will be negative.
Trade Surplus = It is a situation in which a country exports are more than its imports. When a trade surplus exists, net exports will be positive.
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