Question
A country purchases $3 billion of foreign-produced goods and services and sells $2 billion of domestically produced goods and services to foreign countries. It has exports of
a. $3 billion and a trade deficit of $1 billion.
b. $3 billion and a trade surplus of $1 billion.
c. $2 billion and a trade deficit of $1 billion.
d. $2 billion and a trade surplus of $1 billion.
a. $3 billion and a trade deficit of $1 billion.
b. $3 billion and a trade surplus of $1 billion.
c. $2 billion and a trade deficit of $1 billion.
d. $2 billion and a trade surplus of $1 billion.
Answers
GPT-4o mini
To analyze the situation, we can summarize the key details:
- Imports (foreign goods and services purchased by the country): $3 billion
- Exports (domestic goods and services sold to foreign countries): $2 billion
Now, we can calculate the trade balance, which is determined by the formula:
**Trade Balance = Exports - Imports**
Substituting the values:
**Trade Balance = $2 billion (Exports) - $3 billion (Imports)**
**Trade Balance = -$1 billion**
A negative trade balance indicates a trade deficit.
Thus, the country has:
- Exports of **$2 billion**
- A trade deficit of **$1 billion**
The correct answer is:
**c. $2 billion and a trade deficit of $1 billion.**
- Imports (foreign goods and services purchased by the country): $3 billion
- Exports (domestic goods and services sold to foreign countries): $2 billion
Now, we can calculate the trade balance, which is determined by the formula:
**Trade Balance = Exports - Imports**
Substituting the values:
**Trade Balance = $2 billion (Exports) - $3 billion (Imports)**
**Trade Balance = -$1 billion**
A negative trade balance indicates a trade deficit.
Thus, the country has:
- Exports of **$2 billion**
- A trade deficit of **$1 billion**
The correct answer is:
**c. $2 billion and a trade deficit of $1 billion.**
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