A favourable balance of trade occurs when the value of:
A)imports equals the value of exports.
B)cash inflows equal the value of the cash outflows.
C)imports is less than the value of exports.
D)the dollar is greater than the value of the euro.

Question

Quizplus · Accepted Answer

A favourable balance of trade occurs when a country exports more goods and services than it imports, which means that the value of imports is less than the value of exports. This leads to a surplus in the country's balance of trade or a trade surplus, which is a positive economic indicator. A and B are incorrect because they suggest a balance or equality in trade, which may not necessarily be favourable. D is incorrect because it refers to the exchange rate between the dollar and the euro, which is not a determinant of a country's balance of trade.

A Favourable Balance of Trade Occurs When the Value Of