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Difficulty: EasyForeign Trade Types and Balance of Payments

In a given trading year, a country recorded visible merchandise exports of $520 million\$520\text{ million} and visible merchandise imports of $380 million\$380\text{ million}. What is the country's Balance of Trade in millions of dollars?

Answer: 140 million dollars

Answer

The country's Balance of Trade is 140 million dollars.
The Balance of Trade measures the difference between a country's visible exports and visible imports. Subtracting $380 million\$380\text{ million} from $520 million\$520\text{ million} gives a favorable Balance of Trade of 140 million dollars140\text{ million dollars}.

Step-by-Step Solution

1
Identify visible exports and visible imports from the given data.
Visible exports = 520million;Visibleimports=520 million; Visible imports = 380 million.
Balance of Trade deals specifically with merchandise (visible) transactions.
2
Apply the Balance of Trade formula.
Balance of Trade = Visible Exports - Visible Imports.
Trade balance represents the net earnings from physical goods traded.
3
Calculate the difference.
520million−520 million - 380 million = 140 million dollars.
Subtracting total merchandise imports from total merchandise exports yields a trade surplus of 140 million dollars.

Key Concept

Balance of Trade Calculation
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Topics

Foreign Trade Types and Balance of Payments

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