If a Country Sells More Goods and Services to the Rest

question 9

Multiple Choice

If a country sells more goods and services to the rest of the world than it purchases from the other countries, then the country has a:

• A) trade deficit.
• B) budget deficit.
• C) trade surplus.
• D) budget surplus.

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Definitions:

Income Effect

Economic principle that describes how a change in an individual's income affects their purchasing behavior.

Interest Rate

The percentage charged on a loan or paid on savings over a certain period of time, essentially the cost of borrowing money or the reward for saving.

Optimal Choice

The most efficient, advantageous selection or decision based on available information and constraints.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute the consumption of one good for another.