Which of the following reflects a trade imbalance?

Which of the following reflects a trade imbalance?

• A. Balanced trade
• B. Trade surplus
• C. Trade deficit
• D. Export-driven economy

Answer: (C)

A trade imbalance occurs when the value of a country's imports differs significantly from the value of its exports. A trade deficit indicates that a country is importing more goods and services than it is exporting. This can result in a negative balance of trade, where the outflows of money for imports exceed the inflows from exports. In contrast, balanced trade indicates that the value of imports equals the value of exports, leading to no trade imbalance. A trade surplus occurs when exports exceed imports, resulting in a positive balance of trade. An export-driven economy focuses on creating goods for export to maintain economic growth but does not inherently indicate a trade imbalance. Therefore, a trade deficit is the suitable choice that directly reflects a trade imbalance, as it specifically highlights the scenario where spending on imports surpasses earnings from exports.

A trade imbalance occurs when the value of a country's imports differs significantly from the value of its exports. A trade deficit indicates that a country is importing more goods and services than it is exporting. This can result in a negative balance of trade, where the outflows of money for imports exceed the inflows from exports.

In contrast, balanced trade indicates that the value of imports equals the value of exports, leading to no trade imbalance. A trade surplus occurs when exports exceed imports, resulting in a positive balance of trade. An export-driven economy focuses on creating goods for export to maintain economic growth but does not inherently indicate a trade imbalance. Therefore, a trade deficit is the suitable choice that directly reflects a trade imbalance, as it specifically highlights the scenario where spending on imports surpasses earnings from exports.