What is balance of trade Class 12

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Looking for What is a balance of trade (BoT) in balance of payments chapter class 12 as per the syllabus of CBSE and other state Board

Let’s understand this concept

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.

Points to Remember about the Balance of Trade

  • Balance of Trade is also called BoT in short.
  • The BoT is just a small part of the Current account of the Balance of Payments statement.
  • Balance of Trade can be positive or negative

What is Trade Surplus in BoP

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

What is Trade Deficit in BoP

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

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Anurag Pathak
Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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