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
Correct Answer: Trade surplus
Solution : The correct answer is (d) Trade surplus
A trade surplus occurs when the value of a country's exports of goods and services is greater than the value of its imports. In other words, the country is selling more goods and services to other countries than it is buying from them. This leads to a positive balance of trade, and it is commonly referred to as a trade surplus.
A trade surplus can have various implications for an economy. It can contribute to an increase in foreign exchange reserves, provide domestic industries with a competitive advantage, and potentially stimulate economic growth. However,excessive trade surpluses can also raise concerns about trade imbalances, currency valuation, and potential trade conflicts with other countries.
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