ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Exports of goods and services exceed imports of goods and services
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Imports of goods and services exceed exports of goods and services
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Investment income received from abroad exceeds investment income paid to foreigners
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Investment by foreigners exceeds domestic investment in other countries
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Detailed explanation-1: -On the other hand, an unfavorable balance of trade, also known as a trade deficit, occurs when a country imports more goods than it exports. This means that the country is spending more on imports than it is earning from exports, and it can be a cause for concern if it persists over a long period of time.
Detailed explanation-2: -The trade balance is the difference between the value of exports of goods and services and the value of imports of goods and services. A trade deficit means that the country is importing more goods and services than it is exporting; a trade surplus means the opposite.
Detailed explanation-3: -The fundamental cause of a trade deficit is an imbalance between a country’s savings and investment rates. As Harvard’s Martin Feldstein explains, the reason for the deficit can be boiled down to the United States as a whole spending more money than it makes, which results in a current account deficit.
Detailed explanation-4: -A balance of payments deficit means the nation imports more commodities, capital and services than it exports.
Detailed explanation-5: -If the exports of a country exceed its imports, the country is said to have a favourable balance of trade, or a trade surplus. Conversely, if the imports exceed exports, an unfavourable balance of trade, or a trade deficit, exists.