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Balance of Trade; Trade Deficit and Trade Surplus quiz

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  • What is the balance of trade?
    The balance of trade is the difference between a country's exports and imports, also known as net exports.
  • When does a country have a trade surplus?
    A country has a trade surplus when its exports exceed its imports.
  • What is a trade deficit?
    A trade deficit occurs when a country's imports are greater than its exports.
  • What does it mean if a country has balanced trade?
    Balanced trade means that a country's exports are equal to its imports.
  • How is an open economy different from a closed economy?
    An open economy trades goods and services with other countries, while a closed economy does not engage in international trade.
  • What are exports?
    Exports are goods and services sold by a country to other countries.
  • What are imports?
    Imports are goods and services bought by a country from other countries.
  • Which country has had a persistent trade deficit for many years?
    The United States has had a persistent trade deficit for many years.
  • Why does the United States have a trade deficit, especially with China?
    The United States imports more goods from countries like China than it exports to them, leading to a trade deficit.
  • What is comparative advantage in the context of international trade?
    Comparative advantage is when a country produces goods at a lower opportunity cost than others and trades for goods it is less efficient at producing.
  • How do savings relate to the balance of trade?
    If a country saves, its current consumption is less than its output, which can affect the balance between exports and imports.
  • What is economic investment as discussed in the lesson?
    Economic investment refers to using current resources to increase future output, such as building factories or developing new technologies.
  • Does having a trade deficit always mean an economy is struggling?
    No, a trade deficit does not necessarily mean an economy is struggling; its implications depend on other economic factors.
  • What is the main focus in discussions about international trade?
    The main focus is often on the balance of trade and net exports.
  • How do trade deficits and surpluses change over time?
    Trade deficits and surpluses fluctuate over time and are influenced by factors like savings and investment.