ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Trade balance is equal to exports-imports
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Trade balance can result in a surplus
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Trade surplus in the U.S. started in 1975
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Trade balance can result in a deficit
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Detailed explanation-1: -Running a trade deficit is nothing new for the United States. Indeed, it has run a persistent trade deficit since the 1970s-but it also did throughout most of the 19th century.
Detailed explanation-2: -The most significant cause of the trade deficit is the low rate of U.S. domestic savings by households, firms, and the government relative to its investment needs. To make up for that shortfall, Americans must borrow from countries abroad (such as China) with excess savings.
Detailed explanation-3: -The overall U.S. trade deficit widened 12.2 percent in 2022 to nearly $1 trillion as Americans bought large volumes of foreign machinery, pharmaceuticals, industrial supplies and car parts, according to new data released by the Commerce Department. The US last had a trade surplus in 1975.
Detailed explanation-4: -The United States has been running consistent trade deficits since 1976. Before that, the U.S. was generally a net exporter.