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Unformatted text preview: balanced trade. In the next chapter we develop a theory that explains an economys trade bal-ance, but even at this early stage it is easy to think of many factors that might in-fluence a countrys exports, imports, and net exports. Those factors include the following: The tastes of consumers for domestic and foreign goods The prices of goods at home and abroad The exchange rates at which people can use domestic currency to buy foreign currencies The incomes of consumers at home and abroad The cost of transporting goods from country to country The policies of the government toward international trade As these variables change over time, so does the amount of international trade. But were not just talking about buying a carwere talking about confronting this countrys trade deficit with Japan. trade deficit an excess of imports over exports balanced trade a situation in which exports equal imports...
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- Spring '10