-Import goes down in the buying nation
The trade balance is the difference between Exports - Imports. If a surplus is achieved this means that the country is currently exporting more than it imports. The Option selected determine that the level of imports goes down in the buying nation meaning that exports are going to be stronger in relation to the imports, therefore a surplus is created.
2 3 4 5 1 is wrong i just took the test
The sequence of the events that could lead to a trade surplus is given below.
Explanation: Trade surplus is a positive balance of economic measure where the total value of export exceeds the value of import.
trade surplus= export-import.
When the trade surplus occurs the selling nation's currency value appreciates because the selling nation can dominate on the exchange market . This dominate happens for exporting goods a lot.
When a nation has a positive balance in the economy and exports are exceeding imports over a certain period, we have a "trade surplus"; so imports decline for the selling nation, exports rise up following the appreciation of the selling nation's currency.
Thereby thr sequence of events would be:
2 then 3 thence 4 next 5 and thence 1
Import cost for the buying nation goes up. Demand for foreign currency increases. Import goes down in the buying nation. The buying nation’s currency value depreciates. Tiles the selling nation’s currency value appreciates.