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Chapter 23: Q. 20 (page 576)

The United States exports 14% of GDP while Germany exports about 50% of its GDP. Explain what that means.

Short Answer

Expert verified

The level of trade in the United States is low than the level of trade in Germany.

Step by step solution

01

Definition

GDP stands for gross domestic product which refers to the total volume of final goods and services produced in a region in a given period.

02

Explanation

Given that the United States exports 14% of its GDP whereas Germany exports 50% of its GDP this means the level of trade is larger in Germany and lower in the United States. This means the United States exports 14% of its total output produced which is very low in comparison to Germany which exports 50% of its total output produced.

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Most popular questions from this chapter

If countries reduced trade barriers, would the international flows of money increase?

Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy.

a. Living in an especially large country

b. Having a domestic investment rate much higher than the domestic savings rate

c. Having many other large economies geographically nearby

d. Having an especially large budget deficit

e. Having countries with a tradition of strong protectionist legislation shutting out imports

Both the United States and global economies are booming. Will U.S. imports and/or exports increase?

Imagine that the U.S. economy finds itself in the following situation: a government budget deficit of \(100 billion, total domestic savings of \)1,500 billion, and total domestic physical capital investment of \(1,600 billion. According to the national saving and investment identity, what will be the current account balance? What will be the current account balance if investment rises by \)50 billion, while the budget deficit and national savings remain the same?

Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?
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