Starting from a trade surplus,which of the following would create a trade deficit?
A)a decline in saving and investment
B)a rise in saving and investment
C)a decline in saving and a rise in investment
D)a rise in saving and a decline in investment

Question

Quizplus · Accepted Answer

A decline in saving and a rise in investment would lead to an increase in imports and decrease in exports, leading to a trade deficit. A rise in savings and investment would lead to an increase in exports and decrease in imports, leading to a trade surplus. A decline in saving and investment as well as a rise in saving and a decline in investment do not necessarily correlate with changes in imports and exports and therefore do not necessarily lead to a trade deficit.

Starting from a Trade Surplus,which of the Following Would Create