when the level of income _________ there will be a tendency for the trade balance to improve as imports?
Correct answer: C. falls, fall
- A. increase, increase
- B. falls, increase
- C. falls, fall
- D. increase, fall
Explanation
When income falls, households generally buy fewer imports, so import spending falls and the trade balance tends to improve. This assumes exports are unchanged and imports respond normally to income.
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