An increase in a balance of trade surplus tends to:
A)exert an expansionary effect on the economy.
B)exert a contractionary effect on the economy.
C)occur when a country's exchange rate is too high.
D)occur when a country's exports are too expensive.

Question

Quizplus · Accepted Answer

An increase in a balance of trade surplus means that a country is exporting more than it is importing, which injects more money into the economy through increased sales abroad. This leads to an expansionary effect as it can stimulate production, increase income, and potentially lead to job creation.

An Increase in a Balance of Trade Surplus Tends To