When Nations Continue to Run Large and Ever-Growing Trade Deficits

question 87

True/False

When nations continue to run large and ever-growing trade deficits over extended periods of time,creditor nations will eventually stop taking IOUs and trade will cease.

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Definitions:

Long-Run Economic Profit

The sustainable profit a firm earns over time, assuming entry and exit in the market are possible and adjustments have been made.

Self-Interest

An individual's personal gain or advantage, especially when pursued without regard for others.

Price-Taker Markets

Markets in which individual sellers or buyers have no control over setting prices and must accept the prevailing market price.

Homogeneous Product

Products that are of the same quality and are indistinguishable by buyers.