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Chapter 10: Q 41. (page 267)

Will nations that are more involved in foreign

trade tends to have higher trade imbalances, lower trade imbalances, or is the pattern unpredictable?

Short Answer

Expert verified

Actually, pattern of trade is incalculable.

Step by step solution

01

Step 1. Definition

Foreign trade is the give and takes of goods or services between international borders and regions which we call imports and exports.

02

Step 2.

Foreign trade is generally unpredictable. Trade pattern depends on a various variety of factors which are also different like geography, economy, history, etc. because these factors are not fixed for all nations that’s why trade is also unpredictable.

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Most popular questions from this chapter

If countries reduced trade barriers, would the

international flows of money increase?

Does a trade surplus mean an overall inflow of financial capital to an economy, or an overall outflow of financial capital? What about a trade deficit?

Many think that the size of a trade deficit is due

to a lack of competitiveness of domestic sectors, such as autos. Explain why this is not true.

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

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