“How do imports affect a country’s GDP? Are higher imports good or bad for an economy?”
This is one of many Stears Business interview questions for economics-related roles. To answer the first half of the question, the interviewee will most likely picture one of the most famous equations in economics:
GDP = Consumption + Investment + Government spending + (Exports - Imports)
The candidate remembers that there is a negative sign in front of “Imports” and then correctly answers that imports reduce GDP.
For the second half of the interview questions, the same equation above goes from being a friend to an enemy.
No matter how you look at it, the equation says that imports are bad for GDP—the negative sign is the proof. However, if the candidate proceeds to say that “imports are bad for an economy,” it is the wrong answer.
Why? Well, there are many reasons imports