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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Comparing the U.S. economy today to that of 1950, one finds that today, as a percentage of GDP,

a. exports and imports are both higher.

b. exports and imports are both lower.

c. exports are higher, and imports are lower.

d. exports are lower, and imports are higher.

To determine

Whether the volume of export and import are increased or decreased after 1950.

Answer

Option “a” is correct.

Explanation

Option (a):

While comparing the US economy today to that of 1950, as a percentage of GDP, the volume of export and import seem to be increased. The economic situation is very different before and after 1950. Now, the volume of international trade is very higher and population of the economy has also increased. So, after 1950, both the export and import have become higher. Thus, option “a” is correct.

Option (b):

After 1950, as a percentage of GDP, the volume of international trade has increased. Both the volumes of export and import have become higher. Thus, option “b” is incorrect.

Option (c):

As per the percentage of GDP, the volume of import has increased after 1950. Thus, option “c” is incorrect.

Option (d):

Comparing the export after and before 1950, it shows an increment in its volume. After 1950, more trade favorable policies have come into force which helps to increase the volume of export in the economy. Thus, option “d” is incorrect.

Concept

Concept introduction:

Export: Export refers to trading of goods and services from one country to another country.

Import: It refers to goods and services that are bought domestically and they are produced in other countries.

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