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Balance of Payments

Balance of Trade; Trade Deficit and Trade Surplus


Balance of Trade; Trade Deficit and Trade Surplus

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So when countries have an open economy and they're trading with other countries, they're gonna be exporting stuff importing stuff and there's gonna be this balance is it going to be more exports than imports? More imports than exports. This is called the balance of trade. Let's check it out. So the balance of trade is this difference between exports and imports? We've talked about this before. Probably the balance of trade being another name for our net exports. Right? Net exports. Remember net exports is just exports minus imports. Right? Our net exports. So we're gonna have either this trade surplus or trade deficit or maybe they'll they'll be equal to each other. Our trade surplus is when we're exporting greater than importing our exports are greater than our imports. So we're exporting more stuff than we're importing. We have this surplus from trade work, we're selling more stuff overseas than were buying from overseas. The opposite is a trade deficit. When exports are less than imports. And this is generally what's happening in the USa for quite a while now. Okay the U. S. Has generally run a trade deficit balanced trade. Well this is when exports are equal to imports okay, equal to imports. And then the general focus this is the general focus when people talk about trade overseas and they're talking about international uh relationships and international trade. This is what they kind of focus on. Is this balance of trade, these net exports that we have this trade deficit in the U. S. Okay so net exports there, remember exports minus imports. And let's just quickly look at this graph of us net exports over time they they decrease they increase right? It's never the same year over year. But what do we notice is that it's always negative here? Right, negative. And that means that we are exporting less then we're importing. Okay we're importing more stuff and that's generally stuff where one of the biggest imports is from china where we're bringing in a lot of things from china. Um And we were basically importing more than we're exporting. So us the United States has had a persistent trade deficit and that's one of those kind of quick multiple choice. The current events kind of things that they want you to know is that the United States runs a trade deficit? Okay. And we've done it persistently for quite some time. Even before this graph we were still running a trade deficit for a bit there. Okay. Um So that's about it. For for for this this is just a few definitions that you want to know about exports imports. Trade trade situations and you want to remember that the United States has run a persistent trade deficit. Cool. Alright. Let's go ahead and move on to the next video