In a world of many trading countries, the trade between two countries need not be balanced for the trade of each to be in global balance. Differing demands and productive capabilities among countries will cause a specific country to have trade deficits with some countries and surplus with other countries. Which of the following statements best summarizes the above?
A
A country's trade will always be in balance even though it runs a deficit with a single country.
B
A country's trade deficits and surpluses with other countries always balance out.
C
A country's global trade balance is a sign of strength or weakness.
D
A country's global trade balance is determined by relative demand and productive capabilities.
Correct Answer: A country's global trade balance is determined by relative demand and productive capabilities.
