At Christmas, five-year-old Gwen runs a massive trade deficit with her parents: She “exports” only a wrapped candy cane to her parents, but she “imports” a massive number of video games, dolls, and pairs of socks.
a. Is this trade deficit a good thing for Gwen?
b. When Gwen turns 25, her parents insist on being repaid for all those years of Christmas presents—that is, they require her to run a “trade surplus.” Is this “trade surplus” good news for Gwen? Why or why not?