Question

what causes trade deficits and surpluses？Use a equation to answer

Answer 1

Solution

Causes of DEFICITS

When a business expires, a country does not produce everything that is needed and takes a loan from foreign states to pay for import. They are called current account deficits.

Trade deficits also occur when companies are ready in other countries. Exported as export factories exporting raw materials for export Ready-made items are counted as imports when sent back to the country. Earnings can be benefited by the company's stock price and taxes can increase the country's revenue stream, although imports are reduced by the country's total domestic production.

Surplus

Trade surplus is an economic solution to the positive balance of trade, where the country's exports are more than imports. When the results of the above calculations are positive, trade surpluses occur. Trade surplus shows the net flow of local currencies in the foreign market