UNDERSTANDING BALANCE OF TRADE: DEFINITION, FORMULA, AND EXAMPLES
Balance of trade is the difference between a country's exports and imports.
A positive balance of trade occurs when a country exports more than it imports, while a negative balance of trade occurs when a country imports more than it exports.
The formula for calculating balance of trade is: Balance of Trade = Total Value of Exports - Total Value of Imports.
Balance of trade is a crucial economic indicator that reflects a country's competitiveness in the global market.
A positive balance of trade can lead to economic growth, while a negative balance of trade can lead to a trade deficit and economic instability.
Examples of countries with a positive balance of trade include China, Germany, and Japan, while examples of countries with a negative balance of trade include the United States and the United Kingdom.
Policies such as tariffs, subsidies, and currency manipulation can affect a country's balance of trade.