In a recession,the trade balance often improves because
A) service exports exceed manufactured good exports
B) banks sell depressed assets
C) fewer households can afford luxury imports
D) direct investment abroad declines
E) the capital account exceeds the current account

Question

Quizplus · Accepted Answer

During a recession, households often have less disposable income, which leads to a reduction in demand for luxury imports. This can lead to a decrease in imports and an improvement in the trade balance.

In a Recession,the Trade Balance Often Improves Because