In Econland Exports Equal 25 Percent of Total Output, While Imports

question 130

Multiple Choice

In Econland exports equal 25 percent of total output, while imports equal 20 percent of total output. Econland has a:

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

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Definitions:

Inferior Good

A type of good for which demand decreases as the consumer's income rises, reversing the typical behavior observed with normal goods.

Long-run Equilibrium

A state in which economic forces such as supply and demand are balanced and in the context of production, firms are operating at an efficient scale.

Decreasing-cost Industry

An industry in which production costs fall as the industry expands, often due to economies of scale or technological improvements.

Long-run Equilibrium Prices

The price at which the quantity supplied equals the quantity demanded, stabilized over a longer period, factoring in all market adjustments and resource mobility.