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Trade Deficit and Trade Surplus

Please answer the three questions below.

Define a trade deficit and a trade surplus. What are the implications of a long-term trade deficit or trade surplus? What techniques are available to correct balance of payment deficit or surplus?

Please provide proper references and cites properly format. If you are using a book, please provide chapter, paragraph and/or page number(s)

Also, when providing websites- internet references, please make sure I am allowed or able to retrieve those references (they should NOT be from subscribed websites etc).

Solution Preview

In trade deficit, the economic measure is a negative balance of trade. It usually happens when the country's imports are more than its exports. It represents an outflow of a nation's domestic currency to foreign lands. When an opposite happens, e.g., a country's exports exceeds its imports, a country is said to have a negative balance of trade or commonly known as trade surplus.

Economists believe that a short term trade deficit is essential for a country to grow, develop and prosper. However, they also consider long term trade deficit ...

Solution Summary

The solution discusses about trade deficit and trade surplus. References are included.

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