Question

6. What is the impact of costly investment on trade balance in the long run?
(a) It decreases trade balance.
(b) It increases trade balance.
(c) It may decrease or increase trade balance.
(d) It has no impact on trade balance.

Answer 1

Option C

Explanation: Trade balance increases when export is higher than imports. Higher investment does not automatically leads to higher export. Therefore, trade balance may increase, decrease or remain the same.