A country has a trade deficit when the ________
A) exchange rate of its currency with other currencies is fixed
B) exchange rate of its currency with other currencies is variable
C) value of its exports exceeds the value of its imports
D) total flow of money into the country equals the total flow of money out of the country
E) value of its imports exceeds the value of its exports
Answer: E
Explanation: When the value of goods and services imported by a country exceeds the value of goods and services it exports, the country has a negative balance of trade, or a trade deficit.
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