TRADE
Questions to Consider
14) Define balance of trade.
15) When does a country have a trade surplus?
16) When does a country have a trade deficit?
17) Why might a large trade deficit hurt a nation's economy?
14) Define balance of trade.
15) When does a country have a trade surplus?
16) When does a country have a trade deficit?
17) Why might a large trade deficit hurt a nation's economy?
b. Explain that most trade takes place because of comparative advantage in the production of a good or service.
Based on the examples used in SSEIN1a, the country with the lowest opportunity cost for producing a good or service should specialize in that good and then trade with another country for the other good. By producing those goods for which it has the lowest opportunity cost, countries can consume beyond the production possibilities of their own country. Specialization allows countries to allocate resources to their best possible use and creates greater economic efficiency.
c. Define balance of trade, trade surplus, and trade deficit.
A country’s balance of trade refers to the value of its exports minus the value of its imports for measurable during a specific time. Remember, this is the calculation used to determine the value of the Net Exports component of GDP. If the value of a country’s exports exceeds the value of its imports, the country enjoys a trade surplus. If the value of a country’s exports fall short of the value of its imports, the country has a trade deficit.
Based on the examples used in SSEIN1a, the country with the lowest opportunity cost for producing a good or service should specialize in that good and then trade with another country for the other good. By producing those goods for which it has the lowest opportunity cost, countries can consume beyond the production possibilities of their own country. Specialization allows countries to allocate resources to their best possible use and creates greater economic efficiency.
c. Define balance of trade, trade surplus, and trade deficit.
A country’s balance of trade refers to the value of its exports minus the value of its imports for measurable during a specific time. Remember, this is the calculation used to determine the value of the Net Exports component of GDP. If the value of a country’s exports exceeds the value of its imports, the country enjoys a trade surplus. If the value of a country’s exports fall short of the value of its imports, the country has a trade deficit.
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