Question : ___________ is the difference between a country's exports and imports of goods and services.
Option 1: Trade deficit
Option 2: Trade surplus
Option 3: Balance of payments
Option 4: Current account
Correct Answer: Trade deficit
Solution : The correct answer is (a) Trade deficit.
A trade deficit is the difference between a country's exports and imports of goods and services over a specific period of time, typically a year. When a country's imports exceed its exports, it results in a trade deficit. In other words, the value of goods and services that a country buys from other countries exceeds the value of goods and services it sells to them. A trade deficit indicates that a country is importing more than it is exporting, which can have implications for its economy, including the outflow of currency and potential impacts on domestic industries. The opposite of a trade deficit is a trade surplus (option b), which occurs when a country's exports exceed its imports. The balance of payments (option c) is a broader concept that includes not only the trade balance but also capital flows, financial transactions, and other international economic transactions. The current account (option d) is a component of the balance of payments that tracks the trade balance, net income from abroad, and net transfers.
Question : When a country's exports of goods and services exceed its imports, it is said to have a:
Option 1: Balance of payments surplus
Option 2: Balance of payments deficit
Option 3: Trade deficit
Option 4: Trade surplus
Question : When a country's imports exceed its exports, it results in:
Option 1: A trade deficit
Option 2: A trade surplus
Option 3: A balance of payments surplus
Option 4: A balance of payments deficit
Question : When a country's imports exceed its exports, it is said to have a:
Option 3: Balance of payments surplus
Option 4: Balance of payments deficit
Question : Which of the following is not a type of balance of payments surplus or deficit?
Option 1: Trade surplus or deficit
Option 2: Current account surplus or deficit
Option 3: Capital account surplus or deficit
Option 4: Service account surplus or deficit
Question : Which of the following will increase a country's current account deficit?
Option 1: An increase in exports of goods and services
Option 2: A decrease in imports of goods and services
Option 3: An increase in income from foreign investments
Option 4: An increase in transfer payments to foreign countries
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