In the Short Run, a Trade Deficit Allows More Consumption

question 126

Multiple Choice

In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because the:

• A)country eventually will consume more and produce less.
• B)country eventually will sell all its financial assets to foreigners.
• C)domestic currency will appreciate.
• D)country eventually has to produce more than it consumes in order to pay foreigners their profits.

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Definitions:

Teamwork

Work done with an understanding and commitment to group goals on the part of all team members.

Sense Making

The process through which people give meaning to experience.

Disruptive Conditions

Circumstances that significantly alter the normal course of operations, potentially causing upheaval.

Teamwork

The collaborative effort of a group to achieve a common goal or to complete a task in the most effective and efficient way.