Trade Imbalance

Tuesday, 9 – 2 – 2016

Imbalance

1. Do Nothing, because a floating exchange rate will correct it

Trade deficits and surpluses can be self – correcting if the exchange rate is allowed to adjust freely

2. Fiscal Policy

Expenditure

Expenditure

A government may cut public expenditure and raise taxes to reduce total demand in their economy so people have less to spend on imports

3. Adjust interest rates

A government may attempt to attract more inward investment to their economy to help offset a trade deficit by raising interest rates

4. Protectionism

A country may use trade barriers to make imports more expensive to buy or simply to limit the amount of imports in order to correct a trade deficit

 

Sumber :

  1. Google Pict. Imbalance (Accsess on February 9,2016)
  2. Google Pict. Expenditure (Accsess on February 9,2016)
  3. Moynihan. D & Brian Titey. (2015). Economics, A Complete Course for IGCSE and O Level: University of Cambridge International Examination.

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Dan Moynihan & Brian Titey. (2015). Economics; A Complete Course for IGCSE and O Level. 2015. hlm 349

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