Asked by megha ramani on May 10, 2024
Verified
What is the difference between a trade deficit and a trade surplus? If a firm wants to manufacture in another country, which of these trade situations would it prefer?
Trade Deficit
A situation that occurs when a country imports more goods and services than it exports, resulting in a negative balance of trade.
Trade Surplus
A situation where a country's exports exceed its imports during a specific time period, indicating a positive balance of trade.
- Understand the distinction between trade deficit and trade surplus and their implications on international business.
Verified Answer
SD
Sonam DorjiMay 16, 2024
Final Answer :
A trade deficit means that the country imports more goods than it exports. A trade surplus indicates that the country has a higher level of exports than imports. Firms would prefer to manufacture in a country that has a trade surplus, because it signals a greater opportunity to export products to more markets.
Learning Objectives
- Understand the distinction between trade deficit and trade surplus and their implications on international business.