Difference between the total value of exports and imports is called ___________ .a)Balance of Paymentb)Balance of Tradec)Surplus Budgetd)Deficit BalanceCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

The difference between exports and imports is called the balance of trade. If imports are greater than exports, it is sometimes called an unfavourable balance of trade. If exports exceed imports, it is sometimes called a favourable balance of trade.

Answer

The difference between exports and imports is called the balance of trade. If imports are greater than exports, it is sometimes called an unfavourable balance of trade. If exports exceed imports, it is sometimes called a favourable balance of trade. option B is ryt

Answer

Balance of Trade

The difference between the total value of a country's exports and imports is called the balance of trade. It is an important economic indicator that provides insight into the competitiveness and performance of a country's economy in the global market. The balance of trade is calculated by subtracting the value of imports from the value of exports. If the value of exports exceeds the value of imports, the country has a trade surplus. Conversely, if the value of imports exceeds the value of exports, the country has a trade deficit.

Importance of Balance of Trade

The balance of trade is significant because it reflects the economic relationship between a country and the rest of the world. It helps to determine whether a country is a net exporter or a net importer of goods and services. A positive balance of trade (trade surplus) indicates that a country is exporting more than it is importing, which can contribute to economic growth and development. On the other hand, a negative balance of trade (trade deficit) suggests that a country is importing more than it is exporting, which can have negative consequences for the economy.

Factors Affecting Balance of Trade

Several factors can influence a country's balance of trade, including:

1. Exchange rates: The value of a country's currency relative to other currencies can impact the competitiveness of its exports and imports. A weaker currency can make exports more affordable and attractive to foreign buyers, thus improving the balance of trade.

2. Domestic demand: The level of domestic consumption and investment can affect the demand for imports. Higher domestic demand may lead to increased imports, widening the trade deficit.

3. International competitiveness: The quality, price, and reputation of a country's goods and services in the global market can influence its export performance. A competitive advantage in certain industries can contribute to a trade surplus.

4. Government policies: Trade policies, such as tariffs, quotas, and subsidies, can impact the balance of trade. Protectionist measures can restrict imports and promote domestic industries, potentially improving the trade balance.

5. Global economic conditions: Economic growth, recessions, and fluctuations in global demand can impact a country's trade balance. Changes in the economic environment can affect both exports and imports.

Conclusion

The balance of trade is a crucial economic indicator that measures the difference between a country's total exports and imports. It provides insights into the competitiveness and performance of a country's economy in the global market. A positive balance of trade (trade surplus) indicates that a country is exporting more than it is importing, while a negative balance of trade (trade deficit) suggests the opposite. Various factors influence the balance of trade, including exchange rates, domestic demand, international competitiveness, government policies, and global economic conditions.

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