 |
Definition of 'Balance Of Trade - BOT'
The difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; the opposite scenario is a trade surplus.
Also referred to as "trade balance" or "international trade balance"
|
 |
Investopedia explains 'Balance Of Trade - BOT'
The balance of trade is one of the most misunderstood indicators of the U.S. economy. For example, many people believe that a trade deficit is a bad thing. However, whether a trade deficit is bad thing is relative to the business cycle and economy. In a recession, countries like to export more, creating jobs and demand. In a strong expansion, countries like to import more, providing price competition, which limits inflation and, without increasing prices, provides goods beyond the economy's ability to meet supply. Thus, a trade deficit is not a good thing during a recession but may help during an expansion.
|
-
Countries track money coming in and going out through something called the balance of payments. Learn more here.
Read More »
-
Learn how a country's current account balance reflects the country's economic health.
Read More »
-
Congress often debates pressuring China to appreciate its currency, but the yuan/dollar peg has benefits for both countries.
Read More »
-
-
Deficit can be a sign of trouble for some countries, and of health for others. Find out what it means when more funds are exiting than entering a nation.
Read More »
-
The WTO sets the global rules of trade. But what exactly does it do and why do so many oppose it?
Read More »
|
|
