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Chapter 23: Q. 7 (page 575)

Why does the trade balance and the current account balance track so closely together over time?

Short Answer

Expert verified

The track balance number is included in the current account balance.

Step by step solution

01

Step 1. Trade Balance

The difference between imports and exports is known as a trade balance.

02

Step 2. Reason

Trade balance number and foreign money flow from global investments is included in the current account balance.

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Most popular questions from this chapter

What is included in the current account balance?

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?

The GDP for the United States is \(18,036 billion and its current account balance is 鈥揬)484 billion. What percent of GDP is the current account balance?

State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy:

  1. Export sales to Germany
  2. Returns paid on past U.S. financial investments in Brazil
  3. Foreign aid from the U.S. government to Egypt
  4. Imported oil from the Russian Federation
  5. Japanese investors buying U.S. real estate

At one point Canada鈥檚 GDP was \(1,800 billion and its exports were \)542 billion. What was Canada鈥檚 export ratio at this time?
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