Which of the following statements is correct? In an open economy:
A)the country engages in trade but always has balanced trade
B)the country does not import at all and therefore always has a trade surplus
C)the country may have a deficit, surplus or zero balance in its trade balance
D)none of the above

Question

Quizplus · Accepted Answer

In an open economy, the country engages in trade with other countries which may result in a deficit (importing more than exporting), surplus (exporting more than importing) or a zero balance in its trade balance. Therefore, option C is the correct statement. Option A is incorrect as it assumes that trade is always balanced. Option B is also incorrect as it assumes that the country does not import at all and always has a surplus.

Which of the Following Statements Is Correct? in an Open