chapter 4 Flashcards
(39 cards)
the difference between the value of a country’s exports and the value of a country’s imports for a given period.
Balance of trade (BOT)
the largest component of a country’s balance of payments (BOP).
Balance of trade
The balance of trade is also referred to as the
trade balance,
the international trade balance,
the commercial balance, or the
net exports.
A country that imports more goods and services than it exports in terms of value has a ____ while a country that exports more goods and services than it imports has a ____
trade deficit
trade surplus.
The United States regularly runs a _____, while China usually runs a large _____
trade deficit
trade surplus.
formula for calculating the BOT can be simplified
the total value of exports minus the total value of its imports
EX-IM
t or f
The BOT on its own is not an indicator of economic health, and a negative trade balance is not necessarily bad. In order to use the trade balance as part of an economic health assessment, context is needed. One must look at why the balance is positive or negative.
t
trade deficit or ?
a negative trade balance.
trade surplus or ?
a positive trade balance.
indicates that a country’s producers have an active foreign market.
positive balance of trade/trade surplus
means that currency flows outwards to pay for exports, indicating that the country may be overly reliant on foreign goods.
negative balance of trade/trade deficit
can be a result of a country having a competitive advantage in the production and export of certain goods, or it can be the result of a country’s currency being relatively undervalued, making its exports cheaper for foreign buyers.
trade surplus
This means that the country is spending more on imports than it is earning from exports.
trade deficit
an be the result of a country having a comparative disadvantage in the production of certain goods, or it can be the result of a country’s currency being relatively overvalued, making its imports cheaper and its exports more expensive.
trade deficit
a part of the balance of payments and is represented in the current account, which also includes income from investments and transfers such as foreign aid and gifts
balance of trade
a record of all international economic transactions made by a country’s residents, including trade as well as financial capital and financial transfers.
balance of payments
balance of payments is a record of all international economic transactions made by a country’s residents, including ____
trade
financial capital
and financial transfers
t or f
It’s important to note that the balance of trade and the balance of payments are the same thing
f
It’s important to note that the balance of trade and the balance of payments are not the same thing, although they are related. The balance of trade measures the flow of goods and services into and out of a country, while the balance of payments measures all international transactions, including trade in goods and services, financial capital, and financial transfers.
trade surplus
country having: ____ advantage
country’s currency being: _______
trade surplus
country having: competitive advantage
country’s currency being: undervalued
trade deficit
country having: ____ advantage
country’s currency being: _______
trade deficit
country having: comparative advantage
country’s currency being: overvalued
Top 5 commodity groups in export value
- Electronic Products
- Other Manufactured Goods
- Coconut oil
- Other mineral Products
- Machinery and Transport
Top 5 countries in export
- USA
- Japan
- Hongkong
- People’s Republic of China
- Singapore
Total export sales on 2025
6.36 billion usd
Total export sales on 2024
5.98 billion usd
