Question

A country is exhibiting persistent trade surpluses (exports > imports). At the same time,

the economy´s interest income received from abroad exceeds the interest paid to the

rest of the world. How is the country´s net financial investment position evolving?

Answer 1

The trade surplus can help the country's economy to thrive by creating jobs, but it can also lead to increased prices and interest rates. The value of a country's currency in global markets can be influenced by its trade balance, as it allows a country to control the bulk of its currency through commerce.