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Chapter 28: Problem 11

The figure that results when goods imports are subtracted from goods exports is a. the capital account balance. b. the balance of trade. c. the current account balance. d. always less than zero.

Short Answer

Expert verified
The figure that results when goods imports are subtracted from goods exports is known as the Balance of Trade, making option (b) the correct answer.

Step by step solution

01

Understand the question

The question asks for the figure that results when goods imports are subtracted from goods exports. We will analyze each option and determine which one is the correct answer.
02

Analyze Option a: The Capital Account Balance

The capital account balance is a summary of a country's financial transactions, such as investment and borrowing, with other countries. It does not involve goods imports and exports, so option (a) is not the correct answer.
03

Analyze Option b: The Balance of Trade

The balance of trade is the difference between a country's goods exports and goods imports. Mathematically, it can be represented as: Balance of Trade = Goods Exports - Goods Imports This option aligns with the question, making option (b) the correct answer.
04

Analyze Option c: The Current Account Balance

The current account balance is a measure of a country's international transactions, which includes not only the balance of trade but also income flows from investments and transfers, such as remittances. While the current account balance does include the balance of trade, it is not solely based on goods imports and exports. Option (c) is not the correct answer.
05

Analyze Option d: Always Less Than Zero

The statement that the figure is always less than zero implies that the balance discussed here would consistently be negative, indicating a trade deficit. This is not necessarily the case, as there can be situations where a country has a trade surplus or balanced trade, leading to a non-negative subtracted figure. Hence, option (d) is not the correct answer.
06

Conclusion

In conclusion, the figure that results when goods imports are subtracted from goods exports is known as the Balance of Trade, making option (b) the correct answer.

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Most popular questions from this chapter

If the dollar appreciates (becomes stronger), this causes a. the relative price of U.S. goods to increase for foreigners. b. the relative price of foreign goods to decrease for Americans. c. U.S. exports to fall and U.S. imports to rise. d. a balance of trade deficit for the United States. e. all of the above to occur.

Which of the following international accounts records payments for exports and imports of goods, military transactions, foreign travel, investment income, and foreign gifts? a. The capital account b. The merchandise account c. The current account d. The official reserve account

Which of the following international accounts records the purchase and sale of financial assets and real estate between the United States and other nations? a. The balance of trade account b. The current account c. The capital account d. The balance of payments account

An increase in the equilibrium price of a nation's money could be caused by a (an) a. decrease in the supply of the money. b. decrease in the demand for the money. c. increase in the supply of the money. d. increase in the quantity of money demanded.

The infant industry argument for protectionism is based on which of the following views? a. Foreign buyers will absorb all of the output of domestic producers in a new industry. b. The growth of an industry that is new to a nation will be too rapid unless trade restrictions are imposed. c. Firms in a newly developing domestic industry will have difficulty growing if they face strong competition from established foreign firms. d. It is based on none of the above.
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