Other things equal, an export of goods from the United States as a gift to foreigners would lead to an improvement in the U.S. __________ and to no change in the
__________.
A) merchandise trade balance; balance on current account
B) balance on current account; merchandise trade balance
C) financial account balance; merchandise trade balance
D) merchandise trade balance; balance on goods and services

Question

Quizplus · Accepted Answer

Export of goods as a gift to foreigners would result in an increase in the value of U.S. exports and hence an improvement in the merchandise trade balance. However, there would be no change in the balance on the current account, as gifts are not counted as part of either exports or imports in the current account.

Other Things Equal, an Export of Goods from the United