If country A exports $10 billion worth of goods to country B and imports $8 billion worth of goods from country B, then country

Question

3 years ago

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If country A exports $10 billion worth of goods to country B and imports $8 billion worth of goods from country B, then country

A has a: Select one: a. $2 billion trade deficit with country B. b. $2 billion trade surplus with country B. c. $18 billion trade deficit with country B. d. $18 billion trade surplus with country B.

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1 answer:

mr_godi [17] · Answer 1 · 2022-01-31T03:12:57+03:00

Answer:

b. $2 billion trade surplus with country B.

Explanation:

When a country exports more than it imports, it is said that the country has a trade surplus. On the other hand, when a country imports more than it exports, it is said that the country has a trade deficit.

In this case, exports to country B are worth $10 billion which are larger than the $8 billion of imports from country B. Country A's trade surplus is given by:

$S = \$10-\$8\\S=\$2\ billion$

Therefore, the answer is alternative b.