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Chapter 10: Q. 16 (page 266)

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

Short Answer

Expert verified

Yes, imports and exports increase.

Step by step solution

01

Step1. Introduction

International trade refers to the exchange of goods and services via imports and exports. When a country sells a good/service to another, it is export and purchase of goods and services from other countries is referred to as imports.

02

Step2. Explanation

As given, US economy is booming, implying the citizens have increased income in their hands and hence their aggregate demand of products shall rise. This implies there demand for imports shall rise too, hence their would be increased imports.

Since the world economy is booming as well, foreigners shall demand more of products too. This includes US products as well, hence US's exports shall rise as well.

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Most popular questions from this chapter

Does a trade surplus help to guarantee strong economic growth?

What is more important, a country’s current

account balance or GDP growth? Why?

At one point Canada’s GDP was \(1,800billion and its exports were \)542billion. What was Canada’s export ratio

at this time?

State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy:

a. Export sales to Germany

b. Returns paid on past U.S. financial investments in Brazil

c. Foreign aid from the U.S. government to Egypt

d. Imported oil from the Russian Federation

e. Japanese investors buying U.S. real estate

Why does a recession cause a trade deficit to increase?
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