Definition of Trade Balance
What does the term "trade balance" mean? What is the definition of the term "trade balance"?
In order to calculate a country's trade balance, simply take the total value of its exports and subtract from this the total value of its imports.
Trade Balance = Exports - Imports
Another phrase sometimes used instead of "trade balance" is "net exports".
If a country imports more than it exports (for instance, the United States), then the country is said to have a "balance of trade deficit".
If a country exports more than it imports (for instance, China), then the country is said to have a "balance of trade surplus".
Economists have varying opinions as to whether it is "bad" for a country to have a trade deficit or a trade surplus.
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