Question

Drag each tile to the correct box.

What is the sequence of events that could lead to trade surplus?

Answer 1

What is trade surplus?

• Trade surplus:- This term is used when the export of the country product is greater than the cost of imports.

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Events ⤵️

1. the selling nation’s currency value appreciates

2. import cost for the buying nation goes up

3. demand for foreign currency increases

4. import goes down in the buying nation

5. the buying nation’s currency value depreciates

Sequence ⤵️

• import cost for the buying nation goes up
• demand for foreign currency increases
• import goes down in the buying nation
• the buying nation’s currency value depreciates
• the selling nation’s currency value appreciates

I.e. 2-3-4-5-1