Chapter 23: Q. 29 (page 576)
Does a trade surplus help to guarantee strong economic growth?
A trade surplus does not help to guarantee strong economic growth .
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If a country is running a government budget surplus, why is (T – G) on the left side of the saving-investment identity?
If countries reduced trade barriers, would the international flows of money increase?
Both the United States and global economies are booming. Will U.S. imports and/or exports increase?
Table 10.7 provides some hypothetical data on macroeconomic accounts for three countries represented by A, B, and C and measured in billions of currency units. In Table 10.7, private household saving is SH, tax revenue is T, government spending is G, and investment spending is I.
| A | B | C | |
| SH | 700 | 500 | 600 |
| T | 00 | 500 | 500 |
| G | 600 | 350 | 650 |
| I | 800 | 400 | 450 |
Table 10.7 Macroeconomic Accounts
a. Calculate the trade balance and the net inflow of
foreign saving for each country.
b. State whether each one has a trade surplus or
deficit (or balanced trade).
c. State whether each is a net lender or borrower
internationally and explain.
Will nations that are more involved in foreign trade tend to have higher trade imbalances, lower trade imbalances, or is the pattern unpredictable?
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