Economics Balance Of Trade Questions
Trade in natural resources can affect the balance of trade in several ways. Firstly, if a country is a net exporter of natural resources, meaning it exports more natural resources than it imports, it can contribute to a positive balance of trade. This is because the country earns revenue from the exports, which can help to offset the cost of importing other goods and services.
On the other hand, if a country is a net importer of natural resources, meaning it imports more natural resources than it exports, it can contribute to a negative balance of trade. This is because the country needs to spend more on importing natural resources, which can outweigh the revenue earned from exporting other goods and services.
Additionally, fluctuations in the prices of natural resources can also impact the balance of trade. If the price of natural resources increases, it can lead to higher import costs for countries that rely heavily on these resources. This can result in a larger trade deficit and a negative impact on the balance of trade.
Overall, trade in natural resources can significantly influence the balance of trade, depending on a country's position as a net exporter or importer, as well as the price fluctuations of these resources.