Question : What is a trade deficit?
Option 1: When a country imports more than it exports
Option 2: When a country exports more than it imports
Option 3: When a country has no trade
Option 4: When a country has a surplus in trade
Correct Answer: When a country imports more than it exports
Solution : The correct answer is (a) When a country imports more than it exports.
A trade deficit occurs when a country's imports exceed its exports. In other words, it means that a country is buying more goods and services from other countries than it is selling to them. This results in a negative balance of trade.
When a country has a trade deficit, it means that it is spending more on imports, which include goods, services, and commodities, than it is earning from exports. The difference between the value of imports and exports represents the trade deficit.
A trade deficit can be influenced by various factors such as the competitiveness of domestic industries, exchange rates, consumer preferences, and global economic conditions. It can have economic implications, including an increase in foreign borrowing, currency depreciation, and impact on domestic industries.
Related Questions
Trending Articles/News
