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27 November, 14:20

1) Consider the following statement: "Exports pay for imports. Yet in 2012 the nations of the world exported about $540 billion more of goods and services to the United States than they imported from the United States." The apparent inconsistency of these two statements can be resolved by recognizing that

a) these comparisons use different measures of exports and imports.

b) in the short run, exports pay for imports, but in the long run a country can import more goods and services than it exports.

c) in the short run, a country can import more goods and services than it exports, but in the long run exports pay for imports.

d) each measuring agency uses a slightly different accounting system.

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  1. 27 November, 14:34
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    c) in the short run, a country can import more goods and services than it exports, but in the long run exports pay for imports.

    Explanation:

    In the short run when a country imports more goods than it exports it will have a balance of trade deficit. All nations are striving for balance of trade (exports will pay for imports). Over time as trade balances the exports will meet up with imports.
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