Question

(NOTE: you should show how to get the results) Suppose there are three countries in the world. Country A exports $11 million worth of goods to country B and S5 million worth of goods to country C. Country B exports $3 million worth of goods to country A and $6 million worth of goods to country C. Country C exports $4 million worth of goods to country A and $1 million worth of goods to country B. (a) What are the net exports of each country A, B, and C? (b) Show whether (and why) each country (A, B, C) is running trade surplus or trade deficit.

Answer 1

Solution:-

	Export	Import	Net Export
Country A	$11 to B + $5 to C	$3 from B + $4 from C	$9 (Surplus)
Country B	$3 to A + $6 to C	$11 from A + $1 from C	($3) Deficit
Country C	$4 to A + $1 to C	$5 from A + $6 from C	($6) Deficit

Net exports - Net imports:-

Country A = 16 million - 7 million = 9 million (Surplus)

Country B = 9 million - 12 million = 3 million (Deficit)

Country C = 5 million - 11 million = 6 million (Deficit)