A country's trade balance will fall if either
A)investment or saving rise.
B)investment falls or saving rises.
C)saving falls or investment rises.
D)investment or saving fall.

Question

Quizplus · Accepted Answer

A country's trade balance will fall if saving falls or investment rises. This is because a lower saving rate means the country is not accumulating enough financial resources domestically to fund its investments, leading it to borrow from abroad, worsening the trade balance. Similarly, if investment rises without a corresponding increase in savings, it will likely lead to an increase in imports (to support the investment), worsening the trade balance.

A Country's Trade Balance Will Fall If Either