Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Globalization decreases trade surpluses while increasing net income.
B
Globalization increases trade surpluses and has no effect on net income.
C
Globalization increases both trade surpluses and net income.
D
Globalization decreases net income while increasing trade surpluses.
Understanding the Answer
Let's break down why this is correct
Answer
Globalization influences the current account balance by changing how countries trade and invest with each other. When countries become more connected through trade, they can buy and sell more goods and services, which can increase trade surpluses for some nations. For example, if a country exports more than it imports, it earns more money, positively affecting its current account balance. Additionally, globalization allows for foreign investments, which means that countries can earn income from investments abroad. However, if a country invests heavily in foreign markets, it might see its net income decrease, which could negatively impact its current account balance.
Detailed Explanation
Globalization helps countries trade more easily. Other options are incorrect because This answer suggests that trade surpluses go down, which is not true; This option says trade surpluses go up but net income stays the same.
Key Concepts
net income
trade surpluses
globalization
Topic
Current Account Balance Dynamics
Difficulty
hard level question
Cognitive Level
understand
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