If a country had a trade deficit of $20 billion and then its exports rose by $7 billion and its imports fell by $10 billion,its net exports would now be
A)$37 billion
B)$3 billion
C)-$3 billion
D)-$37 billion

Question

Quizplus · Accepted Answer

Initially, the trade deficit was $20 billion, meaning imports exceeded exports by $20 billion. With exports rising by $7 billion and imports falling by $10 billion, the trade deficit decreases by $17 billion ($7 billion increase in exports + $10 billion decrease in imports). Therefore, the new trade deficit is $3 billion, meaning net exports are -$3 billion.

If a Country Had a Trade Deficit of $20 Billion