Question

In the 20 th century our balance of trade was positive until the (LO3) a) \(1950 \mathrm{~s}\) d) \(1980 \mathrm{~s}\) b) \(1960 \mathrm{~s}\) c) \(1990 \mathrm{~s}\) c) \(1970 \mathrm{~s}\)

Short answer

The correct answer is c) \(1970 \mathrm{~s}\), as the United States had a positive balance of trade up to the 1970s.

Step-by-step solution

Understand the question

We are asked to find the time period until 20th century when our balance of trade was positive. The balance of trade is the difference between a country's imports and exports. A positive balance means the country had more exports than imports during that time period.

List of options

We have the following options to choose from: a) \(1950 \mathrm{~s}\) b) \(1960 \mathrm{~s}\) c) \(1970 \mathrm{~s}\) d) \(1980 \mathrm{~s}\) e) \(1990 \mathrm{~s}\)

Research and reasoning

By checking historical data on the balance of trade and/or having proper knowledge about world economy through the years, we can identify that the United States had a positive trade balance up to the 1970s. In the 1980s, due to various economic changes and different international economic policies, the United States started to experience a negative balance of trade which continued into the future.

Provide the answer

As per the information provided above, the correct answer is: c) \(1970 \mathrm{~s}\)

Key concepts

International Trade

International trade refers to the exchange of goods and services between countries. This trade across international borders is a significant feature of the global economy and plays a vital role in influencing a country's economic strength and growth. For example, if a country can produce certain goods at a lower cost than other countries, through trade, it can sell its products internationally, hence maximizing its economic potential.

Understanding international trade is crucial because it affects a country's economic situation, including employment, production levels, and the availability of consumer goods.

As seen in the exercise regarding the United States' balance of trade, international policies and the global economy landscape drastically influence a country's trade status. The exercise encourages students to recognize the impact of historical events and trade policies on a nation's economy, emphasizing the importance of international trade history and its ongoing effects.

Exports and Imports

Exports refer to goods and services sent out of a country for sale in another. Meanwhile, imports are goods and services brought into a country from abroad. The balance between these two components determines the balance of trade for a country.

To comprehend the balance of trade, students should recognize exports and imports as integral elements. When a country exports more than it imports, it has a trade surplus, leading to a positive balance of trade. Conversely, importing more than it exports results in a trade deficit, culminating in a negative balance of trade.

Understanding the complexities of exports and imports is vital for analyzing economic health. For instance, if a country like the United States experiences a surge in imports due to high consumer demand but sees a decline in exports, it may lead to a trade deficit. This dynamic is shown in the exercise, highlighting the pivot point in the 1970s when the U.S. transitioned from a trade surplus to a trade deficit, illustrating how exports and imports affect a country's economic standing.

Economic History

Economic history delves into past economic activities to understand current economic processes and patterns. By studying various economic phases across different periods, such as the 20th century, as mentioned in the exercise, students can identify the factors that influenced the balance of trade during each era.

Let's take the example from the provided exercise. The economic history of the United States saw a shift in the trade balance after the 1970s, with key factors like industrial competition from abroad, changing consumer preferences, and adjustments in trade policies affecting the balance of trade.

Learning about economic history through exercises like these offers context and insight. Such historical analysis clarifies why certain decades experienced a positive trade balance while in others, the balance shifted negatively, shaping the landscape of modern international trade and economics.