Asked by Eunice Gwendolyn on Jul 03, 2024
Verified
Because of the Great Recession of 2008,the trade deficit in 2009 relative to the trade deficit in 2006 was
A) twice.
B) three times.
C) one fourth.
D) one half.
Great Recession
A severe global economic downturn that occurred from late 2007 through mid-2009, marked by significant declines in GDP, high unemployment, and financial instability.
Trade Deficit
A situation where a country's imports exceed its exports during a specific period, leading to a negative balance of trade.
2008
A year marked by the global financial crisis, often associated with the fall of major banks and economic recession.
- Determine the origins and effects of current account deficits and trade discrepancies.
Verified Answer
HQ
Hammile QamarJul 04, 2024
Final Answer :
D
Explanation :
The trade deficit is the difference between a country's imports and exports. During a recession, imports tend to decrease due to lower demand and exports may also decrease due to lower global demand. Therefore, it is likely that the trade deficit in 2009 would be smaller than the trade deficit in 2006. Since the question asks for the ratio between the two, we can say that the trade deficit in 2009 was about half of the trade deficit in 2006. Therefore, the answer is D, one half.
Learning Objectives
- Determine the origins and effects of current account deficits and trade discrepancies.