ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Export revenue = import spending
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Export revenue is greater than import spending
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Export revenue is less than import spending
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None of the above
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Detailed explanation-1: -If the value of exports exceeds the value of imports, it is said that there is a trade surplus; if imports are greater than exports, the country has a trade deficit.
Detailed explanation-2: -Current account deficit (CAD) is when the value of a country’s imports of goods and services is greater than its exports. CAD and fiscal deficit together make up twin deficits that can impact the stock market and investors. Fiscal Deficit is the gap between the government’s expenditure requirements and its receipts.
Detailed explanation-3: -It is possible that a country-say India-imports more goods (everything from cars to phones to machinery to food grains etc.) than it exports. In such a case, it would have a “deficit” on its trade account. In other words, more money is going out of the country than coming in via the trade of physical goods.
Detailed explanation-4: -If exports exceed imports then the country has a trade surplus and the trade balance is said to be positive. If imports exceed exports, the country or area has a trade deficit and its trade balance is said to be negative.