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Use the table listing the real value of exports, imports, and gross domestic product (GDP) in millions for a small country to answer the following questions
Use the table listing the real value of exports, imports, and gross domestic product (GDP) in millions for a small country to answer the following questions. Year 1990 2000 2010 Exports 450.00 490.00 480.00 Imports 500.00 470.00 560.00 GDP 2,500.00 2,850.00 3,250.00 a. For each of the years, calculate the real value of exports and imports as a percentage of real GDP. b. Calculate the trade balance for each of the years. Based on your answers, in which years was this small country running a trade deficit? In which years was it running a trade surplus?
Expert Solution
Part a
| Year | Exports | Imports | GDP | Exports as percenatge of GDP (%) | Imports as percenatge of GDP (%) |
| 1990 | 450.00 | 500.00 | 2500.00 | 18.0 | 20.0 |
| 2000 | 490.00 | 470.00 | 2850.00 | 17.2 | 16.5 |
| 2010 | 480.00 | 560.00 | 3250.00 | 14.8 | 17.2 |
For year 1990,
Exports as percentage of Real GDP = Exports / Real GDP * 100
= 450 Millions / 2500 Millions * 100 = 18%
Imports as percenatge of Real GDP = Imports / Real GDP * 100
= 500 Millions / 2500 Millions * 100 = 20%
Similarly values have been calculated for other years.
Part b
| Year | Exports | Imports | Trade Balance |
| 1990 | 450.00 | 500.00 | -50.00 |
| 2000 | 490.00 | 470.00 | 20.00 |
| 2010 | 480.00 | 560.00 | -80.00 |
A country's trade balance equals the value of its exports minus its imports. Trade Balance = Exports - Imports
Trade Balnce for 1990 = 450.00 - 500.00 = -50 Millions.
Similarly values for other years have been calculated.
Trade Surplus occurs when exports exceed imports. Trade Deficit occurs when imports exceeds exports.
In years 1990 and 2010, small country is running a trade deficit of -50 millions and - 80 millions respectively. In both these years imports exceed exports.
In year 2000, small country is running a tarde surplus of 20 millions as exports exceed imports.
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