Multiple Choice
Which of the following best explains how overpumping of groundwater in coastal areas leads to water scarcity?
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7. Externalities
Externalities: Social Benefits and Social Costs
Multiple Choice
Other nations could make the United States trade deficit larger if they:
A
impose tariffs on goods imported from the United States while removing tariffs on U.S. imports
B
increase their exports to the United States without increasing their imports from the United States
C
reduce their exports to the United States and increase their imports from the United States
D
decrease both their exports to and imports from the United States equally
Verified step by step guidance1
Understand that a trade deficit occurs when a country imports more goods and services than it exports, resulting in a negative net export balance.
Recognize that the U.S. trade deficit with other nations depends on the difference between U.S. imports from those nations and U.S. exports to those nations.
Analyze how changes in other nations' trade behavior affect the U.S. trade deficit: if other nations increase their exports to the U.S. without increasing their imports from the U.S., the U.S. imports rise relative to exports, enlarging the trade deficit.
Consider the impact of tariffs: imposing tariffs on U.S. goods would reduce U.S. exports to those nations, potentially increasing the U.S. trade deficit, but removing tariffs on U.S. imports would increase U.S. imports, also affecting the deficit.
Conclude that the scenario where other nations increase their exports to the U.S. without increasing their imports from the U.S. directly leads to a larger U.S. trade deficit, as the gap between imports and exports widens.
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