When the Balance of Trade Is in Balance, We Know

question 35

Multiple Choice

When the balance of trade is in balance, we know with certainty that

• A) the value of all debit transactions equals the value of all credit transactions.
• B) the value of exports of goods equals the value of imports of goods.
• C) the value of capital exports equals the value of capital imports.
• D) the value of exports of goods and services equals the value of imports of goods and services.

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Definitions:

Fix Exchange Rate

A government or central bank policy of setting the exchange rate of a currency relative to other currencies.

Dollar-Yen Foreign Exchange

The exchange rate between the U.S. dollar and the Japanese yen, indicating how much yen can be exchanged for one U.S. dollar in the foreign exchange markets.

Trade Deficit

An economic condition that occurs when a country imports more goods and services than it exports.

Appreciate

In economic terms, an increase in the value of an asset or currency.