A country in South America is adversely affected by trade deficits and the government wants to move to a floating exchange rate system to help adjust trade imbalances. However, a political group is opposing this. As critics of floating exchange rates, they claim that trade deficits are determined by the

Question

Quizplus · Accepted Answer

Trade deficits are often influenced by the balance between savings and investment in a country, as this balance affects the need for foreign capital and thus impacts trade balances.

A Country in South America Is Adversely Affected by Trade