Related Content: MGT604 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of Management of Financial Institutions
BALANCE OF TRADE
- The balance of trade is the difference between the monetary value of exports and
imports in an economy over a certain period of time.
- A positive balance of trade is known as a trade surplus and consists of exporting
more than is imported;
- A negative balance of trade is known as a trade deficit or, informally, a trade gap.
Physical balance of trade
- Monetary balance of trade is different from physical balance of trade (which is
expressed in amount of raw materials). Developed countries usually import a lot of
primary raw materials from developing countries at low prices.
- Often, these materials are then converted into finished products, and a significant
amount of value is added
Factors that can affect BOT
- Exchange rates
- Trade agreements or barriers
- Other tax, tariff and trade measures
- Business cycle at home or abroad.
Balance of Payment