A trade deficit occurs when:
A)a country imposes a price floor.
B)a country's imports exceed its exports.
C)a country imposes a price ceiling.
D)a country's exports exceed its imports.
E)when the domestic product market is in disequilibrium.

Question

Quizplus · Accepted Answer

A trade deficit occurs when a country's imports exceed its exports, meaning that the country is spending more on imported goods than it is earning from exported goods. This can lead to a negative effect on the country's economy, as it results in a decrease in the country's currency value and can harm domestic industries that compete with foreign importers. Price ceilings and floors, domestic market disequilibrium, and exports exceeding imports would not directly result in a trade deficit.

A Trade Deficit Occurs When