A Nation's Trade Deficit Will Tend to Shrink When Its

question 141

Multiple Choice

A nation's trade deficit will tend to shrink when its

• A) economy is expanding.
• B) economy is shrinking.
• C) investment environment is attractive to foreigners.
• D) economy is growing at a normal rate.

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved.

Market Equilibrium

The state in which the supply and demand for a good or service are balanced, leading to a stable price.

Consumer Surplus

The variance between the total price consumers are ready and able to fork over for a good or service and the sum they ultimately pay.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.