Starting from a trade surplus, what would create a trade deficit?
A) a decline in saving and investment
B) a rise in saving and investment
C) a decline in saving and a rise in investment
D) a rise in saving and a decline in investment

Question

Quizplus · Accepted Answer

If there is a decline in saving (meaning people are spending more) and a rise in investment, this will lead to an increase in imports (since people are buying more goods and services) and a decrease in exports (since the country is investing more in other countries rather than exporting goods and services). This ultimately leads to a trade deficit.

Starting from a Trade Surplus, What Would Create a Trade