Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 19, Problem 12CQ
To determine
Trade surplus as the implication of the strong economy.
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Both the United States and global economies are booming. Will U.S. imports and/or exports increase?
If imports exceed exports, is it a trade deficit or a trade surplus? What about if exports exceed imports?
If 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.
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Economics: Private and Public Choice
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- If China has a trade surplus with the United States, it is a good thing for the U.S economy? True or Falsearrow_forwardWill nations that are more involved in foreign trade tend to have higher trade imbalances, lower trade imbalances, or is the pattern unpredictable?arrow_forward“When a nation is running a trade surplus, capital is flowing out of the country.”Do you agree with the statement? Explain your choice.arrow_forward
- Shoes are labor-intensive and satellites are capital-intensive to produce. The United States has abundant capital. China has abundant labor. According to the Heckscher–Ohlin model, which good will China export? Which good will the United States export? In the United States, what will happen to the price of labor (the wage) and to the price of capital?arrow_forwardFrom time to time, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?arrow_forwardWhy exports of fish and fish products are essential to the economies of many countries and regions?arrow_forward
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