question archive 1) Changing the trade balance Suppose the fictional country of Fortace is under pressure from its trading partners to decrease its trade surplus
1) Changing the trade balance Suppose the fictional country of Fortace is under pressure from its trading partners to decrease its trade surplus
Subject:EconomicsPrice:2.87 Bought7
1) Changing the trade balance Suppose the fictional country of Fortace is under pressure from its trading partners to decrease its trade surplus. Which of the following would help decrease Fortace's trade surplus? Check all that apply.
Decreasing taxation while holding government expenditures, saving, and investment constant
Encouraging the economies of Fortace's trading partners to grow more quickly than the economy of Fortace
2) True or False: If the government of Fortace lowers its trade surplus by repealing tariffs, Fortace can expect an increase in imports but no changes in either the government deficit or the gap between saving and investment.
True False
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Answer:
1.
trade surplus means export larger than import values.
Correct option.....a decreasing taxation while holding government expenditures, savings........... (It will increase consumption, increasing import and finally reducing trade surplus)
Incorrect option b with economic growth of trading partners, their import may increase.
2.
False
Explanation —repealing tariff will reduce government tax revenues and government deficit may increase.
