Asked by Trenton Henderson on Jul 18, 2024
Verified
Which of the following statements is true of the balance of trade?
A) Adopting mercantilistic policies always result in a balance of trade for countries.
B) At no point in time can a country have a negative trade balance.
C) As the global market is always balanced, individual countries do not need to maintain trade balances.
D) Income disparities in a country can lead to a negative trade balance.
Balance of Trade
The difference between a country's exports and imports of goods, indicating the net earnings from trade.
Income Disparities
The difference in earnings among individuals or groups, often highlighting the economic inequality within a society.
- Acquire knowledge on the constituents and value of balance of trade and current accounts in the context of international economics.
- Analyze how the distribution of income and patterns of consumption affect national economic systems.
Verified Answer
NH
Nadine HusseinJul 23, 2024
Final Answer :
D
Explanation :
Income disparities within a country can affect its consumption patterns, potentially leading to increased imports over exports, which can result in a negative trade balance. This is because a higher income segment might demand more imported goods, influencing the trade balance negatively if not matched by equivalent exports.
Learning Objectives
- Acquire knowledge on the constituents and value of balance of trade and current accounts in the context of international economics.
- Analyze how the distribution of income and patterns of consumption affect national economic systems.