When a Country Runs a Trade Deficit, It Does So

question 90

Multiple Choice

When a country runs a trade deficit, it does so by:

• A) borrowing from foreign countries or selling assets to them.
• B) borrowing from foreign countries or buying assets from them.
• C) lending to foreign countries or selling assets to them.
• D) lending to foreign countries or buying assets from them.

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Definitions:

Economy

The large set of interrelated production, consumption, and exchange activities that aid in determining how scarce resources are allocated.

Full-Employment

Full-employment refers to the level of employment rates where there is no cyclical or deficient-demand unemployment, essentially meaning that everyone who wants to work and is able to work can find employment at the current wage rates.

Real GDP

Is the inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, providing a more accurate depiction of an economy’s size and growth rate.

Jobless Recovery

A period in which the economy recovers from a recession but the job market does not, leading to stagnant or rising unemployment despite growth.