It May Be Misleading to Label a Trade Deficit as "Unfavourable

question 15

Multiple Choice

It may be misleading to label a trade deficit as "unfavourable" or "adverse" because:

• A)the multiplier does not apply to a trade deficit.
• B)it increases our aggregate output and employment.
• C)Canadian consumers benefit from a trade deficit during the period it occurs.
• D)all of the above reasons.

---

Definitions:

Specialization

The practice of focusing on and becoming expert in a particular subject or skill, in economics, it refers to individuals or firms concentrating on the production of limited kinds of goods or services.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than others.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity, leading to more efficient trade.

Radios

Devices used for the wireless transmission and reception of sound through electromagnetic waves.