economy can run a trade deficit (have negative exports) permanently if: a. The Current and Financial acco

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 17SCQ: For each of the following, indicate which type of government spending would justify a budget deficit...

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Concept explainers

Factor Models

Many attributes might be related to an asset's risk, including market capitalization (size), dividend yield, growth, price-earnings ratio, etc. The use of these traditional descriptors, however, presents a few problems:

Question

An economy can run a trade deficit (have negative exports) permanently if:

a. The Current and Financial account generate a net outflow of money, and the external debt does not increase as percentage of GDP.

b. The level of GDP of the country is sufficiently low.

c. Migration of the national labour force to overseas is allowed.

d. The Current and Financial account bring enough net inflow of money, and the external debt does not increase as percentage of GDP.

Definition Definition Situation in which a country spends more on imports than it makes through exports. When a trade deficit exists, net exports will be negative. Trade Deficit = (Imports) - (Exports)

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