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Magazine Chapter 23: The International Trade and Capital Flows
Q. 10
Explain the relationship between a current account deficit or surplus and the flow of funds.
Q. 15
Why does a recession cause a trade deficit to increase?
Q. 19
Describe a scenario in which a trade surplus benefits an economy and one in which a trade surplus is occurring in an economy that performs poorly. What key factors or factors are making the difference in the outcome that results from a trade surplus?
Q. 3
State whether each of the following events involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy:
a. Mexico imports services from Japan
b. Mexico exports goods to Canada
c. U.S. investors receive a return from past financial investments in Mexico
Q. 30
What three factors will determine whether a nation has a higher or lower share of trade relative to its GDP?
Q. 31
What is the difference between trade deficits and balance of trade?
Q. 32
Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Explain why such a statement is economically impossible.
Q. 33
A government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why such a statement is contradictory.
Q. 37
Many think that the size of a trade deficit is due to a lack of competitiveness of domestic sectors, such as autos. Explain why this is not true.
Q. 38
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.
