QuestionJune 21, 2025

Are trade deficits always bad? Yes NO Rewatch

Are trade deficits always bad? Yes NO Rewatch
Are trade deficits always bad?
Yes
NO
Rewatch

Solution
4.2(229 votes)

Answer

NO Explanation 1. Define Trade Deficit A trade deficit occurs when a country's imports exceed its exports. 2. Evaluate Economic Impact Trade deficits can lead to increased foreign debt but also allow access to cheaper goods and services, potentially boosting consumer welfare. 3. Consider Long-term Effects Persistent trade deficits may harm domestic industries but can be offset by foreign investment and economic growth. 4. Assess Contextual Factors The impact of a trade deficit depends on factors like economic structure, currency strength, and global market conditions.

Explanation

1. Define Trade Deficit<br /> A trade deficit occurs when a country's imports exceed its exports.<br /><br />2. Evaluate Economic Impact<br /> Trade deficits can lead to increased foreign debt but also allow access to cheaper goods and services, potentially boosting consumer welfare.<br /><br />3. Consider Long-term Effects<br /> Persistent trade deficits may harm domestic industries but can be offset by foreign investment and economic growth.<br /><br />4. Assess Contextual Factors<br /> The impact of a trade deficit depends on factors like economic structure, currency strength, and global market conditions.
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