Many economists and politicians view a trade deficit as harmful to a country's economy. Which of the
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Question:
Many economists and politicians view a trade deficit as harmful to a country's economy. Which of the following is a reason why this does NOT necessarily have to be the case?
-a merchandise trade deficit is just one component of the balance of payments; the other accounts could be positive.
-if imports are higher because of low foreign prices, this could be beneficial, because it adds to our country's wealth and provides consumers and businesses with more purchasing power.
-all of the listed choices are reasons.
-a trade deficit could mean that the country's domestic economy is strong relative to other economies; consequently imports are likely to exceed exports.
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