Question

Using the GDP components, explain to a lay person why a presidential candidate talking about trade deficits communicates better with voters

Answer 1

A presidential candidate will always be able to communicate better with voters regarding trade deficit as he can very well explain how the trade deficit and import and export patterns of them all is affecting GDP.

Trade deficit refers to the excess of imports over exports.

Also, GDP = C+I+G+X-M, where X is exports and M is imports.

As exports fall below imports, the value of X-M becomes negative, which leads to a fall in GDP and also leads to trade deficit, both of which are bad for the economy.

This can be explained by a presidential candidate better because he will have all the reliable data along with audience willing to listen to him.