Question:
A country can have an increased surplus in its balance of trade as a result of
(1) an increase in domestic inflation.
(2) declining imports and rising exports.
(3) higher tariffs imposed by its trading partners.
(4) an increase in FDI inflows.
(5) an appreciation of the currency.
Correct Answer:
(2)
Answer Explanation:
The Balance of Trade specifically measures the difference between the value of a country’s exported goods and its imported goods. An increased surplus mathematically requires that the value of exports rises while the value of imports declines (or grows much slower).
Topic: Balance of Payments Year: 2018
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