Question

The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has
a. positive net exports with Australia and a trade surplus with Australia.
b. negative net exports with Australia and a trade surplus with Australia.
c. positive net exports with Australia and a trade deficit with Australia.
d. negative net exports with Australia and a trade deficit with Australia.

Answer 1

Answer:

Option (d) is correct.

Explanation:

The information given in the question clearly shows that the value of goods and services U.S imported from Australia is greater than the value of goods and services Australia imported from the U.S. This exchange of goods and services between these two nations also shows that exports of Australia towards U.S. are greater than the exports of U.S. towards the Australia.

Balance of trade or Trade Balance or Net exports:

= Exports - Imports

Since Australia's Exports are greater than its imports, so Australia has a positive net exports and a trade surplus and U.S's Exports are less than its imports, so U.S has a negative net exports and a trade deficit with Australia.