Question

What does favourable balance of trade refers to?

Answer 1

Answer:

favourable balance of trade is a positive situation where a country exports more goods and services than what it imports

Explanation:

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Answer 2

Answer:

The Balance of Trade is an economic measure calculated by subtracting the total amount of imported items to the total amount of those exported. This balance explains how the country is positioned in terms of commercial relationships with other nations. If the balance is positive, it means the county exports more than what it imports and if it is a negative one, is the other way around. A favorable balance of trade is, nevertheless, not always a positive thing.

Depending on the country economic dynamics and foreign trade policies a favorable balance created through protectionism is not always a good thing since it might reduce the country’s standard of living because of scarcity and high prices, due to a lack of competition. On the other hand, a large unfavorable balance can diminish the country’s financial stability because of a deterioration of its foreign currency reserves.