What is balance of trade Class 12

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What do you mean by balance of Trade in BoP class 12

In short Balance of Trade is the difference of Exports of goods and Imports of goods. The formula of Balance of Trade can be written as

Balance of Trade = Exports of goods – Imports of goods.

Here goods mean the physical goods that can be touched or felt.

In other words, you can say BoT is the Net Trade of physical goods of a country with the rest of the world.

The BoT is just a small part of the Current account of the Balance of Payments statement.

When Exports of visible (tangible) goods is greater than the imports of goods. It means that country has a trade surplus.

In other words, When the Balance of Trade shows a Positive balance (Exports > Imports) It is called Trade Surplus

When Exports of visible (tangible) goods is less than the imports of goods. It means that country has a Trade Deficit.

In other words, When the Balance of Trade shows a Negative balance (Exports < Imports) It is called as Trade Deficit