A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries.It has
A)exports of $3 billion and a trade surplus of $1 billion.
B)exports of $3 billion and a trade deficit of $1 billion.
C)exports of $2 billion and a trade surplus of $1 billion.
D)exports of $2 billion and a trade deficit of $1 billion.

Question

Quizplus · Accepted Answer

Export refers to the amount of domestically produced goods and services a country sells to foreign countries, whereas imports refer to the amount of foreign-produced goods and services a country purchases.

In this scenario, the country has exports of $2 billion (goods and services produced domestically and sold to foreign countries) and imports of $3 billion (foreign-produced goods and services purchased by the country).

Therefore, the country has a trade deficit of $1 billion, as its imports exceed its exports. Thus, the correct answer is D.

A Country Purchases $3 Billion of Foreign-Produced Goods and Services