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HomeHomework HelpeconomicsTrade Imbalances

Trade Imbalances

Trade imbalances refer to the disparity between a country's imports and exports, where a nation may import more than it exports (trade deficit) or export more than it imports (trade surplus). Economic growth is the increase in a country's production of goods and services over time, which can be influenced by trade imbalances through factors such as investment, consumption, and resource allocation.

intermediate
3 hours
Economics
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Overview

Trade imbalances, which occur when a country's imports and exports are not equal, play a significant role in shaping economic growth. A trade deficit can lead to increased national debt and potential job losses, while a trade surplus can boost GDP and create jobs. However, both scenarios have their ...

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Key Terms

Trade Deficit
A situation where a country's imports exceed its exports.

Example: The U.S. has a trade deficit with China.

Trade Surplus
A situation where a country's exports exceed its imports.

Example: Germany often runs a trade surplus.

Balance of Payments
A record of all economic transactions between residents of a country and the rest of the world.

Example: The balance of payments includes trade, investments, and transfers.

GDP
Gross Domestic Product, the total value of goods and services produced in a country.

Example: A rising GDP often indicates economic growth.

Tariff
A tax imposed on imported goods.

Example: The government imposed tariffs on steel imports.

Quota
A limit on the amount of a specific good that can be imported.

Example: The country set a quota on sugar imports.

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Key Concepts

trade deficittrade surplusbalance of paymentseconomic impact