Question : ______ refers to the difference between the value of exports and imports of a country.
Option 1: Gross National Product (GNP)
Option 2: Net Domestic Product (NDP)
Option 3: Balance of Trade
Option 4: Balance of Payments
Correct Answer: Balance of Trade
Solution : The correct answer is (c) Balance of Trade.
Balance of Trade refers to the difference between the value of a country's exports and imports of goods and services. It is a component of the broader concept called Balance of Payments, which includes not only the balance of trade but also other financial transactions between residents of one country and residents of other countries.
When a country's exports of goods and services exceed its imports, it has a positive balance of trade, also known as a trade surplus. This indicates that the country is exporting more than it is importing, leading to a net inflow of funds from abroad.
On the other hand, when a country's imports of goods and services exceed its exports, it has a negative balance of trade, also known as a trade deficit. This indicates that the country is importing more than it is exporting, resulting in a net outflow of funds to other countries.
The balance of trade is an important indicator of a country's international trade competitiveness and the relative strength of its domestic industries. It can have implications for a country's overall economic health, employment levels, and currency exchange rates.
