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Chapter 23: Q. 20 (page 576)

The United States exports 14% of GDP while Germany exports about 50% of its GDP. Explain what that means.

Short Answer

Expert verified

The level of trade in the United States is low than the level of trade in Germany.

Step by step solution

01

Definition

GDP stands for gross domestic product which refers to the total volume of final goods and services produced in a region in a given period.

02

Explanation

Given that the United States exports 14% of its GDP whereas Germany exports 50% of its GDP this means the level of trade is larger in Germany and lower in the United States. This means the United States exports 14% of its total output produced which is very low in comparison to Germany which exports 50% of its total output produced.

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Most popular questions from this chapter

Does 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?

Some economists warn that the persistent trade deficits and a negative current account balance that the United States has run will be a problem in the long run. Do you agree or not? Explain your answer.

Using the national savings and investment identity, explain how each of the following changes (ceteris paribus) will increase or decrease the trade balance:

  1. A lower domestic savings rate
  2. The government changes from running a budget surplus to running a budget deficit
  3. The rate of domestic investment surges

What is more important, a country鈥檚 current account balance or GDP growth? Why?

Occasionally, 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?
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