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.