What does the term 'Balance Of Trade' most accurately describe in the context of global economics?
A. Goods and services sold to other countries
B. Payments not made in exchange for goods or services
C. Control of money supply by the central bank
D. A country's total trade balance
Answer (2)
The correct answer is letter D. A country's total trade balanceThe Balance of Trade refers to the difference between the total value of a country’s exports and the total value of its imports over a certain period, usually a year. In simple terms, it's like comparing how much your country earns by selling products to other countries (exports) versus how much it spends buying products from other countries (imports).If a country exports more than it imports, it has a trade surplus. If it imports more than it exports, it has a trade deficit. This balance is very important in measuring a country's economic health and global competitiveness. For example, if the Philippines exports bananas, electronics, and coconut oil worth ₱100 billion, but imports oil and machines worth ₱150 billion, it has a trade deficit of ₱50 billion.Having a trade surplus can be a good sign—it means other countries are buying more of your products. A trade deficit is not always bad, but if it’s too big, it can mean the country is depending too much on foreign goods and may be losing local jobs. The balance of trade is also a major part of a country’s balance of payments, which tracks all its financial transactions with the rest of the world.
Option D, “A country's total trade balance,” best captures this concept, as it includes the overall difference between exports and imports.The Balance of Trade (BOT) is a key concept in global economics that measures the difference between the value of a country's exports and imports over a certain period.If a country exports more than it imports, it has a trade surplus (positive balance of trade).If it imports more than it exports, it has a trade deficit (negative balance of trade).The Other OptionsA (Goods and services sold to other countries) is just exports, not the full balance.B (Payments not made in exchange for goods or services) relates to things like transfers or foreign aid, not trade.C (Control of money supply by the central bank) refers to monetary policy, unrelated to balance of trade.
