ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A trade deficit occurs when a country’s imports exceed its exports during a given time period. It is also referred to as a negative balance of trade (BOT). The balance can be calculated on different categories of transactions: goods (a.k.a., “merchandise”), services, goods and services.

Detailed explanation-2: -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-3: -If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.

Detailed explanation-4: -A positive trade balance (surplus) is when exports exceed imports. A negative trade balance (deficit) is when exports are less than imports. Use the balance of trade to compare a country’s economy to its trading partners. A trade surplus is harmful only when the government uses protectionism.

Detailed explanation-5: -A stock shortage or deficit occurs when the value of the physical stock items on hand, is less than the value of stock in the ledger or stock records. Trading stock shortage or deficit is an expense to the business.