Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It leads to a deficit
B
It has no effect
C
It improves the balance
D
It decreases foreign investment
Understanding the Answer
Let's break down why this is correct
Answer
When a country increases its exports, it sells more goods and services to other countries, which brings in more money. This increase in money from exports improves the current account balance, as the current account measures all transactions related to trade. For example, if a country known for its electronics starts exporting more smartphones, it earns more revenue, leading to a positive impact on its current account. A better current account balance means the country is earning more from trade than it is spending, which is generally good for the economy. Overall, increased exports strengthen the financial position of a country in the global market.
Detailed Explanation
When a country sells more goods to other countries, it earns more money. Other options are incorrect because Some might think that selling more goods means spending more money, leading to a deficit; It's a common mistake to think that exports don't change anything.
Key Concepts
exports
Topic
Current Account and Trade Balance
Difficulty
easy level question
Cognitive Level
understand
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