Which of the following statements is true A A trade deficit

Which of the following statements is? true?

A. A trade deficit with another country is not usually bad if it is balanced out by capital inflows.

B. A trade deficit with another country is not good for an economy as trade is a? zero-sum game.

C. In the presence of national? redistribution, trade reaps no benefit to an economy.

Under which of the following scenarios is a trade deficit likely to be bad for an? economy?

A. When a trade deficit leads to lower dependency on imported goods

B. When the gains from trade are distributed equally in an economy

C. When a trade deficit allows an economy to import capital goods to improve productivity capacity

D. When there is a lack of national redistribution policy in an economy

Solution

1> A. A trade deficit with another country is not usually bad if it is balanced out by capital inflows.

Reason

Trade deficit is not bad as long as the nation has the power to repay their loan later on. For example, US has a huge trade deficit.

2>  D. When there is a lack of national redistribution policy in an economy

Reason

If there is lack of proper redistribution, one party will be better off and another worse off, thus this will make the whole system unstable.