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.
