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# Balance of Payments and Trade Imbalances

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Define balance of payments and trade imbalances and how these can impact both the domestic and foreign countries

#### Solution Preview

Problem: Define balance of payments and trade imbalances and how these can impact both the domestic and foreign countries

Solution:
The balance of payments is essentially a math equation, which looks like this:

Exports - Imports = balance of payments

When we export more than we import, we have a positive balance. When we end up importing more than we export, we have a negative balance of payments. When we look at the balance of payments, we analyze the differences between what we have imported and what we have exported in one year's time. When the balance is negative, we have more money being expended out of the ...

#### Solution Summary

This solution defines the balance of payments and trade imbalances. I also explain how these can impact both the domestic and foreign countries. The explanation is given in 436 words.

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