What might a favorable balance of trade suggest about a country's economy?

What might a favorable balance of trade suggest about a country's economy?

• A. It is unfavorable as imports exceed exports
• B. It is balanced with equal imports and exports
• C. It is strong as exports exceed imports
• D. It is weakened by trade relations

Answer: (C)

A favorable balance of trade suggests that a country's economy is strong, as it indicates that exports exceed imports. This is beneficial for several reasons. Firstly, a surplus in exports means that the country is selling more goods and services abroad than it is buying from other nations, leading to an influx of capital. Such a situation can strengthen domestic industries, as robust export activity may stimulate production and job creation within the country. Moreover, a favorable balance of trade can enhance a country's currency value on the international market, as higher demand for exported goods often translates to increased demand for the currency in which those goods are priced. This can lead to better economic conditions and increased foreign investment. Overall, a surplus in exports is generally seen as a positive indicator of economic health, indicating that the country's goods are in demand globally and contributing positively to its gross domestic product (GDP).

A favorable balance of trade suggests that a country's economy is strong, as it indicates that exports exceed imports. This is beneficial for several reasons. Firstly, a surplus in exports means that the country is selling more goods and services abroad than it is buying from other nations, leading to an influx of capital. Such a situation can strengthen domestic industries, as robust export activity may stimulate production and job creation within the country.

Moreover, a favorable balance of trade can enhance a country's currency value on the international market, as higher demand for exported goods often translates to increased demand for the currency in which those goods are priced. This can lead to better economic conditions and increased foreign investment. Overall, a surplus in exports is generally seen as a positive indicator of economic health, indicating that the country's goods are in demand globally and contributing positively to its gross domestic product (GDP).