Explain the Belief That a Persistent Trade Deficit Is Harmful

question 29

Essay

Explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated and why was it terminated?

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are easily convertible to a known amount of cash and are subject to insignificant risk of changes in value.

Cheques Outstanding

Cheques that have been written and recorded in the payer's accounting system but have not yet been cashed or cleared by the receiving bank.

Prepaid Expenses

Payments made for goods or services to be received in the future, treated as assets on a balance sheet until used.

Operating Expenses

All expenses incurred from a company's operational activities, excluding cost of goods sold, interest, and taxes.