Page 109 - F1 - AB Integrated Workbook STUDENT 2018-19
P. 109

External analysis – economic factors




               7.6  Managing the balance of trade

                          Why we want to avoid a                         Why we want to avoid a
                          long term deficit                              long term surplus




                    It will have to borrow money to fund          A long-term trade surplus can
                     the deficit, resulting in extra interest       cause significant inflationary
                     payments.                                      pressures.

                    The alternative is to sell assets.            A long term surplus is presumably
                                                                    at the expense of other countries'
                    There will be pressure on the                  deficits.
                     country's currency to depreciate



























































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