dmcanzi@watdcsu.UUCP (David Canzi) (07/22/85)
Imagine a fictitious country, San Lorenzo, which has an unfavorable trade balance. What this means is that San Lorenzo is importing more than it is exporting. There are two ways to reverse this situation to a favorable trade balance: 1) Hold exports constant, and decrease imports. The result: The people of San Lorenzo are working just as hard as they were before, but because of the reduced imports, they are getting fewer goods and services for their labor. 2) Hold imports constant, and increase exports. The result: The people of San Lorenzo must work more in order to produce the extra export goods, but they get no extra goods and services for their extra work. Question: In view of this simple thought experiment, why is a situation where your country exports more than it imports called a *favorable* trade balance? Who is it favoring? -- David Canzi "Adequacy -- is it enough?"