a trade surplus occurs when course hero

Why is a surplus a surplus?

This is a surplus, because the quantity supplied is greater than the quantity demanded. This is a market in equilibrium. This is a surplus, because the quantity demanded is greater than the quantity supplied. This is a surplus, because the quantity supplied is greater than the quantity demanded.

Why is the price of a substitute false?

false, because whether the price rises or falls depends on whether the good is normal or inferior. false, because the prices of its substitutes cannot affect a good's own price. false, because if the price of one of its substitutes increases, the price of a good will decrease.

What is demanded equal to?

demanded is equal to the quantity supplied.

Can the market have achieved equilibrium without government interference?

The market could not have achieved equilibrium without government interference.

What is trade surplus?

Updated Nov 22, 2020. A trade surplus is an economic measure of a positive balance of trade, where a country's exports exceed its imports. Trade Balance = Total Value of Exports - Total Value of Imports. A trade surplus occurs when the result of the above calculation is positive. A trade surplus represents a net inflow of domestic currency ...

What does it mean when a country has a trade surplus?

When focusing solely on trade effects, a trade surplus means there is high demand for a country’s goods in the global market , which pushes the price of those goods higher and leads to a direct strengthening of the domestic currency.

How does trade surplus affect currency?

In many cases, a trade surplus helps to strengthen a country’s currency relative to other currencies, affecting currency exchange rates ; however, this is dependent on the proportion of goods and services of a country in comparison to other countries, as well as other market factors.

How does trade affect the economy?

A trade surplus can create employment and economic growth, but may also lead to higher prices and interest rates within an economy. A country’s trade balance can also influence the value of its currency in the global markets, as it allows a country to have control of the majority of its currency through trade.

What is the opposite of a trade surplus?

The opposite of a trade surplus is a trade deficit. A trade deficit occurs when a country imports more than it exports. A trade deficit typically also has the opposite effect on currency exchange rates. When imports exceed exports, a country’s currency demand in terms of international trade is lower. Lower demand for currency makes it less valuable ...

What is the deliberate downward adjustment to the value of a country's currency relative to another currency?

Devaluation is the deliberate downward adjustment to the value of a country's currency relative to another currency, group of currencies, or standard.

What happens if a currency is not pegged to another currency?

If a currency is not pegged to another currency, its exchange rate is considered floating.