Certified Management Accountant 2026 – 400 Free Practice Questions to Pass the Exam

The balance of trade measures the difference between total exports and total imports of goods and services in a country over a specific period. This is a crucial economic indicator as it reflects the competitiveness of a country's economy in the international market. A positive balance, known as a trade surplus, occurs when exports exceed imports, indicating a net inflow of foreign currency. Conversely, a negative balance, or trade deficit, occurs when imports outstrip exports, signaling a net outflow.

By focusing on the difference between exports and imports, the balance of trade provides insights into a country's economic health, its production capabilities, and its consumption patterns relative to other countries. This metric plays a significant role in shaping policy decisions about trade agreements and tariffs. Other options mentioned do not specifically measure trade; for instance, tourism revenue and foreign investments address different economic aspects, while the budget surplus or deficit relates to governmental fiscal policy rather than trade flows.