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A deficit in balance of trade indicates
  • a)
    That the imports of good are less than the exports
  • b)
    That the imports of good are equal to the exports
  • c)
    That the imports of good are greater than the exports
  • d)
    None of the above
Correct answer is 'C'. Can you explain this answer?
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A deficit in balance of trade indicatesa)That the imports of good are ...
A trade deficit is an economic measure of international trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (BOT).

Trade Deficit = Total Value of Imports – Total Value of Exports
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A deficit in balance of trade indicatesa)That the imports of good are ...
Understanding Balance of Trade
The balance of trade is a key economic indicator that measures the difference between a country's exports and imports over a specific period. A deficit occurs when a country imports more than it exports.
What is a Trade Deficit?
- A trade deficit indicates that a country is spending more on foreign trade than it is earning.
- This situation arises when the value of imports exceeds the value of exports.
Why Option C is Correct
- Imports Greater than Exports: A deficit specifically signifies that the total value of goods and services imported is greater than those exported.
- Economic Implications: This can lead to various economic consequences, such as a weakening currency, increased foreign debt, or reliance on foreign markets.
Examples of Trade Deficits
- Country-Specific Examples: Countries like the United States often run trade deficits, importing more consumer goods than they export.
- Global Context: Many developing countries may experience trade deficits as they import machinery and technology to support their growth.
Conclusion
Recognizing a deficit in the balance of trade is crucial for understanding a country's economic health. It reflects the dynamics of international trade and can influence government policy and currency valuation. Thus, option C accurately describes the situation where imports exceed exports, indicating a trade deficit.
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A deficit in balance of trade indicatesa)That the imports of good are ...
A trade deficit is an economic measure of international trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (BOT).
Trade Deficit = Total Value of Imports – Total Value of Exports
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Read the news report given below and answer the question that follow on the basis of the same:The trade deficit between India and China in April-June this fiscal year fell to USD 5.48 billion as compared to USD 13.1 billion in the same period last year, Parliament was informed on Wednesday.In a written reply, Commerce and Industry Minister Piyush Goyal said the bilateral trade between the countries dipped to USD 16.55 billion during the first three months of 2020-21 as against USD 21.42 billion in the same period last year. “Government has consistently taken steps to balance our trade with China by increasing our exports to China and reducing our dependence on imports from China,” he said.In a separate reply, the minister said at present, about 550 tariff lines (or products) are under the restricted/prohibited category for imports under the Foreign Trade Policy. Imports of these products are restricted from all countries, including China.Replying to a separate question, he said merchandise exports from special economic zones (SEZs) dipped to ₹81,481 crore during AprilAugust, 2020 as against ₹1,30,129 crore in the same period of 2019-20. “However, services exports have shown a growth of 9 per cent during April to August 2020 in comparison to corresponding period of previous year,” he added.Q. Considering the steps taken by the government to reduce the Trade deficit with China, choose the correct alternative:(i) To reduce the dependence on imports from China.(ii) To increase our exports to China(iii) To make Rupees stronger than Yuan(iv) To prohibit the use of Chinese goods.

Read the news report given below and answer the question that follow on the basis of the same:NEW DELHI: India’s balance of payments this year is going to be “very very strong” on the back of significant improvement in exports and a fall in imports, Commerce and Industry; Minister Piyush Goyal said on Monday.He said that “good” green shoots are visible in the economy and exports have shown a “good” turnaround. “We are in July at about 91 per cent export level of July 2019 figures. Imports are still at about 70-71 percent of July 2019. So, broadly our balance of payments this year is going to be very very strong, which is why we feel confident that Indian industry will see opportunities for themselves, willsee opportunities of growth,” he said at a FICCI webinar.India’s exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country’s trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.The country posted a trade surplus of USD 0.79 billion in June.Q. Why is India having a very strong Balance of Payment?

Read the news report given below and answer the question that follow on the basis of the same:NEW DELHI: India’s balance of payments this year is going to be “very very strong” on the back of significant improvement in exports and a fall in imports, Commerce and Industry; Minister Piyush Goyal said on Monday.He said that “good” green shoots are visible in the economy and exports have shown a “good” turnaround. “We are in July at about 91 per cent export level of July 2019 figures. Imports are still at about 70-71 percent of July 2019. So, broadly our balance of payments this year is going to be very very strong, which is why we feel confident that Indian industry will see opportunities for themselves, willsee opportunities of growth,” he said at a FICCI webinar.India’s exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country’s trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.The country posted a trade surplus of USD 0.79 billion in June.Q. Consider the following statements:(i) It will get a lot of investments.(ii) The government can achieve its development goals.(iii) Increase the GDP of the economy.(iv) It is more profitable for the domestic manufacturers.Which of the following is the true benefit of having a strong Balance of Payment

Read the news report given below and answer the question that follow on the basis of the same:The trade deficit between India and China in April-June this fiscal year fell to USD 5.48 billion as compared to USD 13.1 billion in the same period last year, Parliament was informed on Wednesday.In a written reply, Commerce and Industry Minister Piyush Goyal said the bilateral trade between the countries dipped to USD 16.55 billion during the first three months of 2020-21 as against USD 21.42 billion in the same period last year. “Government has consistently taken steps to balance our trade with China by increasing our exports to China and reducing our dependence on imports from China,” he said.In a separate reply, the minister said at present, about 550 tariff lines (or products) are under the restricted/prohibited category for imports under the Foreign Trade Policy. Imports of these products are restricted from all countries, including China.Replying to a separate question, he said merchandise exports from special economic zones (SEZs) dipped to ₹81,481 crore during AprilAugust, 2020 as against ₹1,30,129 crore in the same period of 2019-20. “However, services exports have shown a growth of 9 per cent during April to August 2020 in comparison to corresponding period of previous year,” he added.Q. Which of the following has seen growth?

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A deficit in balance of trade indicatesa)That the imports of good are less than the exportsb)That the imports of good are equal to the exportsc)That the imports of good are greater than the exportsd)None of the aboveCorrect answer is 'C'. Can you explain this answer?
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