A country has a trade surplus of $20 billion with its trading partners over a
year. Which change would cause the country to have a trade deficit the
following year, assuming everything else remains the same?
A. The country increases its exports by $30 billion.
B. The country decreases its imports by $10 billion.
O C. The country increases its imports by $10 billion.
O D. The country decreases its exports by $30 billion.

The change that would cause the country with a trade surplus of $20 billion in one year to develop a trade deficit the following year, ceteris paribus, is if D. The country decreases its exports by $30 billion.

A trade deficit develops when the imports rise more than the exports. The country cannot have a trade deficit if it increases its exports by $30 billion, decreases its importation by $10 billion, or increases its imports by $10 billion.

Thus, the only situation for the country to develop a trade deficit is when it decreases its exports by $30 billion with everything else remaining the same.

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