Which of the following statements is true of the balance of trade?
A) Adopting mercantilistic policies always result in a balance of trade for countries.
B) At no point in time can a country have a negative trade balance.
C) As the global market is always balanced, individual countries do not need to maintain trade balances.
D) Income disparities in a country can lead to a negative trade balance.

Question

Quizplus · Accepted Answer

Income disparities within a country can affect its consumption patterns, potentially leading to increased imports over exports, which can result in a negative trade balance. This is because a higher income segment might demand more imported goods, influencing the trade balance negatively if not matched by equivalent exports.

Which of the Following Statements Is True of the Balance