Practice Exam

Question 7 • CMS 2026-2027 Economics and Personal Finance HONORS INITIAL CREDIT

Which describes the difference between a trade surplus and a trade deficit?

Answer

A trade deficit is when a country loses money on products it makes, while a trade surplus happens when production leads to profits.

A trade surplus is when a country imports more than it exports, while a trade deficit happens when exports exceed imports.

A trade surplus is when a country produces more than it consumes, while a trade deficit happens when consumption exceeds production.

A trade surplus is when a country exports more than it imports, while a trade deficit happens when imports exceed exports.

Explanation

A trade surplus occurs when the value of a country's exports is greater than the value of its imports. A trade deficit occurs when imports are greater than exports, so choice D correctly describes the difference. Choice C reverses these definitions.

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