E world is often described as having a global economy. How important is international trade to the United States? A. In the U. S., exports make up more than half of GDP. B. In the U. S., exports are increasing but not as a portion of GDP. C. The U. S. exports fewer goods than any of the other 8 highest income countries. D. The U. S. exports more than it imports, resulting in a trade deficit. E. In the U. S., imports are smaller fractions of GDP than in most other countries.

Option E is correct because imports and exports are smaller fractions of GDP than in most other countries.

Explanation:

Option A and B are incorrect because exports are almost 12 percent of the total GDP. This means that neither the exports are 50% of the total GDP of US nor the exports are not part of the GDP. Any changes in exports effects directly the GDP because GDP is computed as under:

GDP = C + I + G + (X – M)

where the X is exports and M are the imports. So the difference constitutes to increase or decrease in the GDP.

Option D is also incorrect because if the difference is negative, which means that the exports are lower than imports then this negative amount represents trade deficit. If US economy has positive difference then this represents Trade surplus.

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