Answer:
2. Briefly explain what it means to have a balance of trade. Then, explain the
difference between a trade surplus and a trade deficit. What's one way that a trade
surplus might be a benefit, and one way it might be a drawback? (4 points)
Step-by-step explanation:
Having a balance of trade means that a country's exports and imports are equal in value over a given period of time. A trade surplus occurs when a country's exports exceed its imports, resulting in a positive balance of trade. On the other hand, a trade deficit occurs when a country's imports exceed its exports, resulting in a negative balance of trade.
One way that a trade surplus might be a benefit is that it can lead to an increase in domestic production and employment, as there is a higher demand for domestic goods and services. Additionally, a trade surplus can improve a country's currency value and provide more resources for investment in research and development.
However, a trade surplus can also be a drawback if it is caused by an over-reliance on exports and a lack of diversity in the domestic economy. This can make the country vulnerable to fluctuations in international markets and reduce the incentive for domestic innovation and growth. Additionally, a trade surplus can lead to tensions with trading partners who may feel that the country is gaining an unfair advantage.