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Chapter 10: Q 34. (page 267)

If a country is a big exporter, is it more exposed to

global financial crises?

Short Answer

Expert verified

The country may be more exposed to financial crisis.

Step by step solution

01

Step 1. Definition

A financial crisis occurs when financial instruments and assets deplete steeply in value.

02

Step 2.

When a country is an exporter it means a high level of output and employment but also it means that there is an outflow of financial capital as the country exports more.

This means that a large part of the trade is international so the country is more exposed to global or international financial crises.

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Most popular questions from this chapter

Using the national savings and investment identity, explain how each of the following changes (ceteris paribus) will increase or decrease the trade balance:

a. A lower domestic savings rate

b. The government changes from running a budget surplus to running a budget deficit

c. The rate of domestic investment surges

When is a trade deficit likely to work out well for an economy? When is it likely to work out poorly?

The GDP for the United States is \(18,036billion and its current account balance is -\)484billion. What percent of GDP is the current account balance?

What are the two main sides of the national savings and investment identity?

In recent decades, has the U.S. trade balance usually been in deficit, surplus, or balanced?
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