Answer to Question #219483 in Microeconomics for henvi

Question

"Liza, a Thai living in Singapore, bought a car made in Thailand"

Explain the impact of the above transaction on Thailand's imports, exports, and net exports.

Answer 1

a.Impact on Thailand's imports.

By buying a car from Thailand it means Thailand's imports will reduce. Imports make a country dependent on other countries political

and economic power. Therefore a decline in imports will create a trade surplus for Thailand

b. Impact on Thailand's exports

Thailand's exports will increase. Exports boost economic output as measured by gross domestic product ( GDP). This creates jobs and increase wages. Exports will also help Thailand gain a competitive advantage.

c. Impact on Thailand's net exports

Net exports is derived by taking exports minus imports. More exports than imports will create a trade surplus to Thailand .