Question at christmas five-year-old gwen runs a massive, Ask an Expert

Economics

Question: At Christmas, five-year-old Gwen runs a massive trade deficit with her parents: She "exports" only a wrapped candy cane to her parents, but she "imports" a massive number of video games, dolls, and pairs of socks.

a. Is this trade deficit a good thing for Gwen?

b. When Gwen turns 25, her parents insist on being repaid for all those years of Christmas presents-that is, they require her to run a "trade surplus." Is this "trade surplus" good news for Gwen? Why or why not?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92663776

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