A Trade Deficit Might Signal a Problem Of

question 158

Multiple Choice

A trade deficit might signal a problem of:

• A) high unemployment.
• B) high taxes.
• C) low savings.
• D) low spending.

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Definitions:

Relative Purchasing Power Parity

A theory which posits that the rate of inflation in two different countries over a specific period affects the exchange rate between their two currencies.

Expected Inflation

The rate at which the general level of prices for goods and services is expected to rise, eroding purchasing power.

Euros

The official currency of the Eurozone, which is used by 19 of the 27 European Union countries.

Exchange Rate

The rate at which one currency will be exchanged for another currency.