Understanding Balance of Trade

What does "terms of trade" refer to?

• The difference between exports and imports

• The ratio of export prices to import prices

• The number of trading partners a country has

• The value of currency exchanged in trade

A favorable balance of trade occurs when:

• Imports are greater than exports

• Imports equal exports

• Exports are greater than imports

• Trade is conducted in multiple currencies

Which of the following is NOT a component of the Balance of Payment?

• Current Account

• Financial Account

• Income Account

• Capital Account

The Balance of Payment includes:

• Only visible trade

• Only services

• All international economic transactions

• Domestic trade figures

If a country's terms of trade improve, it means:

• Import prices have risen relative to export prices

• Export prices have risen relative to import prices

• The currency value has decreased

• The trade deficit has widened

What does a surplus in the current account indicate?

• The country is importing more than exporting

• The country is borrowing heavily

• The country is exporting more than importing

• The country's currency is devalued

Invisible trade refers to:

• Trade in illegal goods

• Trade that is not recorded

• Trade in services

• Trade that is not taxed

Which of the following would appear in the capital account of the Balance of Payment?

• Export of goods

• Remittances

• Foreign investment

• Tourism revenue

What does a deficit in the Balance of Trade mean?

• The country is not trading internationally

• The value of imports exceeds exports

• The government has stopped foreign borrowing

• Export value exceeds import value

Which is a visible item in the Balance of Trade?

• Banking services

• Machinery export

• Education tourism

• Insurance services