Question

a country experiences a trade deficit when it

exports more goods and services than it imports

imports more goods and services than it exports

receives more from exporting than it spends on imports

receives more from importing than it spends on exports

Explanation:

Define trade deficit

A trade deficit occurs when a nation's imports of goods and services exceed its exports over a given period. This represents a negative balance of trade.

Analyze the options

• Option 1: "exports more goods and services than it imports" describes a trade surplus, which is the opposite of a trade deficit.
• Option 2: "imports more goods and services than it exports" directly matches the definition of a trade deficit.
• Option 3: "receives more from exporting than it spends on imports" describes a positive financial balance from trade (surplus).
• Option 4: "receives more from importing than it spends on exports" is conceptually incorrect, as importing involves spending money rather than receiving it.

Connect to international trade

Understanding how imports and exports balance is a core part of analyzing International Trade Effects on a nation's economy. When a country imports more than it exports, it must pay for the net imports by borrowing or selling assets, which influences currency value and economic health.

Answer:

• exports more goods and services than it imports
• imports more goods and services than it exports (Correct answer)
• receives more from exporting than it spends on imports
• receives more from importing than it spends on exports