Answered: What is a trade deficit? How is a trade…

What is a trade deficit? How is a trade deficit related to the net inflow of foreign capital? Is a trade deficit bad? Why or why not?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 25RQ: Does a trade surplus mean an overall inflow of financial capital to an economy, or an overall...

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What is a trade deficit? How is a trade deficit related to the net inflow of foreign capital? Is a trade deficit bad? Why or
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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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When is a trade deficit likely to work out well for an economy? When is it likely to work out poorly?
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?
Some economists warn that the persistent trade deficits and a negative current account balance that the United States has run will be a problem in the long run. Do you agree or not? Explain your answer.
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