Economics Trade Surpluses And Deficits Questions
Trade surpluses and deficits impact the trade-to-GDP ratio by influencing the overall balance of a country's trade. A trade surplus occurs when a country exports more goods and services than it imports, resulting in a positive trade balance. This increases the trade-to-GDP ratio as the value of exports contributes more to the country's GDP.
On the other hand, a trade deficit occurs when a country imports more goods and services than it exports, resulting in a negative trade balance. This decreases the trade-to-GDP ratio as the value of imports becomes a larger proportion of the country's GDP.
In summary, trade surpluses increase the trade-to-GDP ratio, while trade deficits decrease it.