WORLD HISTORY

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).

Detailed explanation-2: -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-3: -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-4: -Production and exportation of cheap primary products (raw, materials) by developing countries. Such products fetch low prices on the world market hence unfavorable terms of trade. Weak bargaining power among developing countries due to limited economic integration leads to low prices for their exports.

Detailed explanation-5: -The increasing demand for manufactured goods results in more imports of such products at relatively higher prices. Consequently, the terms of trade remain unfavourable for the developing countries.