You are given the following information about a country's trade. Visible Exports £million 18,000 Visible Imports £million 17,800 Balance of Trade £million 200 Surplus or Deficit Surplus If the level of visible exports decreased by £500 million, explain the effect which this would have on the country's Balance of Trade. Show your workings.

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You are given the following information about a country's trade - Leaving Cert Economics - Question 8 - 2008

Question 8

You are given the following information about a country's trade. Visible Exports £million 18,000 Visible Imports £million 17,800 Balance of Trade £millio... show full transcript

Worked Solution & Example Answer:You are given the following information about a country's trade - Leaving Cert Economics - Question 8 - 2008

Step 1

Workings

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Answer

Initially, the visible exports are £18,000 million. If the visible exports decrease by £500 million, the new level of visible exports will be:

$18,000 - 500 = 17,500 \text{ million}$

To determine the balance of trade, we subtract the visible imports from the visible exports:

Visible Exports: £17,500 million

Visible Imports: £17,800 million

Balance of Trade Calculation:

$17,500 - 17,800 = -300 \text{ million}$

Step 2

Explanation

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Answer

The decrease in visible exports has resulted in a new balance of trade showing a deficit of £300 million. This indicates that imports now exceed exports, contrasting the previous surplus of £200 million. Therefore, the overall balance of trade has shifted from a surplus position to a deficit position.

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