Critical reasoning: Neither a rising standard of living nor balanced trade, by itself, establishes a country’s ability to compete in the international marketplace. Both are required simultaneously since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country’s standard of living. According to this statement, a proper test of a country’s ability to be competitive is its ability to:

A balance its trade while its standard of living rises.

B balance its trade while its standard of living falls

C increases trade deficits while its standard of living rises.

D decrease trade deficits while its standard of living falls

Solution

Correct Answer: Option A

Solution

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