Assume that a country currently has a trade deficit.If that country experiences a recession,what would we expect to happen to the trade deficit?

Question

Quizplus · Accepted Answer

During a recession, the domestic demand for goods and services decreases, which means fewer imports are needed. Additionally, the weakened economy may reduce the ability of domestic consumers to purchase foreign goods, resulting in lower imports. Therefore, the trade deficit is likely to decrease, in other words, move towards a trade surplus.

Assume That a Country Currently Has a Trade Deficit