Question

If imports exceed exports, is it a trade deficit or a trade surplus? What about if exports exceed imports?

Short answer

i. Trade Deficit

ii. Trade Surplus

Step-by-step solution

Step1. Introduction

Imports refer to the buying of goods/services from the foreign countries.

Exports refer to the selling of goods/services to the foreign countries.

Step2. Explanation

When imports exceed exports, it implies their is more outflow of money than inflow. Hence, it is called Trade deficit.

When exports exceed imports, it implies their is more inflow of money than outflow. Hence, it is called Trade Surplus.