Manufacturing Industries Practice Test

An unfavorable balance of trade means the country is buying more from abroad than it sells abroad. When imports exceed exports, more money leaves the economy to pay for foreign goods than comes in from selling domestic goods overseas, creating a trade deficit. This describes the negative flow in the trade balance.

If exports exceed imports, the country runs a trade surplus, which is the opposite situation. A balanced trade implies imports and exports are equal, and no trade activity would mean there’s no net inflow or outflow from trade.