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Questions and Answers
What is the balance of trade?
What is a trade surplus?
What is a trade deficit?
Why is measuring the balance of trade problematic?
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What are some factors that can affect the balance of trade?
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What is the difference between the monetary balance of trade and the physical balance of trade?
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What is the current account?
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Which economies typically run trade surpluses?
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What is the view of trade experts and economists on bilateral trade deficits?
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Study Notes
Difference between the Monetary Value of Exports and Imports: Key Points
- The balance of trade is the difference between the monetary value of a nation's exports and imports over a certain time period.
- A balance of trade for goods versus one for services can be distinguished.
- A trade surplus or positive trade balance occurs when a country exports a greater value than it imports, while a trade deficit or negative trade balance occurs when a country imports a greater value than it exports.
- As of 2016, around 60 out of 200 countries have a trade surplus.
- Measuring the balance of trade can be problematic due to problems with recording and collecting data.
- Factors that can affect the balance of trade include exchange rates, tariffs, and quotas.
- The trade balance is likely to differ across the business cycle.
- The monetary balance of trade is different from the physical balance of trade.
- The notion that bilateral trade deficits are bad in and of themselves is overwhelmingly rejected by trade experts and economists.
- The balance of trade forms part of the current account.
- Economies that have savings surpluses, such as Japan and Germany, typically run trade surpluses.
- The issue of trade deficits can be complex, and some argue that they exert a "negative externality" on trading partners and pose a threat to global prosperity.
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Description
This quiz will test your knowledge on the key points related to the difference between the monetary value of a nation's exports and imports, also known as the balance of trade. You will learn about the different types of trade balances, factors that can affect them, and how they can differ across the business cycle. You will also gain insights into the trade deficits and surpluses of various countries and understand the debate surrounding their impact on global prosperity. This quiz is perfect for anyone interested in international trade and economics
