Whether the trade balance is positive (surplus)or negative (deficit)is important because it provides a measure of the financing needs of a particular country.Hence,the trade balance is more important than current account balance.

Question

Quizplus · Accepted Answer

The current account balance is broader and more important as it includes the trade balance (exports minus imports of goods and services), net income from abroad, and net current transfers, providing a more comprehensive measure of a country's international financial position.

Whether the Trade Balance Is Positive (Surplus)or Negative (Deficit)is Important