The Balance Of Trade
the balance of trade is the difference between a country's imports and exports. a trade deficit occurs when a country buys or imports more goods from other countries than it sells or exports. the expenses going out of the country for imports is greater than the income coming in from exports. while a trade deficit could be an indication of less revenue being generated and hence resulting in a lower standard of living in the economy, it could also be a sign of economic expansion. when a country is going through an expansionary stage of its business cycle, aggregate income increases which can trigger a rise in demand for imported goods or services. a balance of trade deficit is favorable for domestic consumers as they enjoy a greater selection of goods and services at competing and lower prices. a trade surplus occurs when a country sells more than it buys from foreign markets. this means that the revenue coming into the country from exports is greater than the payments going out for imports. more revenue usually leads to a rise in employment and wages which is ? for any economy. a surplus ? also arise when an economy's business cycle is in a contracting stage. in this stage, aggregate income decreases, leading to a subsequent decline in a demand for imported goods. if exports remain unchanged, a surplus emerges. a balance of trade surplus is favorable for a country's domestic producers, as they generate higher sales, more revenue and increased profits. when combined into a single figure, an economy's trade transactions paint a useful picture of overall trade activity helping investors identify trends.
- balance of trade・・・貿易収支