Question

Allison, a US citizen, travels to Canada and spent 2000 on souvenir. This transaction is contributing to the ------ a) Trade deficit

b) Trade surplus
c) Balance of trade
d) Economic stagnation

Answer 1

The transaction in which Allison, a US citizen, spent $2000 on souvenirs in Canada contributes to the trade deficit.

Step-by-step explanation:

The transaction in which Allison, a US citizen, spent $2000 on souvenirs in Canada contributes to the trade deficit.

A trade deficit occurs when the value of imports exceeds the value of exports in a country. In this case, since Allison spent money on souvenirs in Canada, it is considered an import for the US and adds to the trade deficit.

This contributes to the trade deficit because the US is buying more goods from other countries than it is selling to them, resulting in a negative balance of trade.