/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q. 29 Does a trade surplus help to gua... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 23: Q. 29 (page 576)

Does a trade surplus help to guarantee strong economic growth?

Short Answer

Expert verified

A trade surplus does not help to guarantee strong economic growth .

Step by step solution

01

Step 1. Trade surplus

When a country's economy is in recession, unemployment is high and GDP is low. Consumption is very low in this economy, and exports exceed imports due to a fall in prices of domestic goods. In contrast, these economies' trade surpluses imply that domestic savings exceed domestic investment, and households and firms invest in the rest of the world.

02

Step 2. Reason

Because trade balances can be in surplus during recessions, having a surplus does not ensure economic growth.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

If a country is a big exporter, is it more exposed to global financial crises?

In what way does comparing a country鈥檚 exports to GDP reflect its degree of globalization?

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

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

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.
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.