The gap between exports and imports in a nation's economy is called the ___________.

• A. trade balance
• B. trade deficit or trade surplus
• C. current account
• D. balance of payments

Answer: (B)

Verified step by step guidance

1. Understand the key terms related to international trade: 'exports' are goods and services sold to other countries, while 'imports' are goods and services purchased from other countries.
2. Recognize that the difference between the value of exports and imports is an important economic indicator that reflects whether a country is selling more to or buying more from the rest of the world.
3. Identify that when exports exceed imports, the country has a 'trade surplus', and when imports exceed exports, the country has a 'trade deficit'. Both of these situations describe the 'trade balance'.
4. Note that the 'trade balance' is a component of the broader 'current account', which also includes income from abroad and current transfers.
5. Conclude that the term specifically describing the gap between exports and imports is the 'trade balance', which can be either a trade surplus or a trade deficit depending on the sign of the difference.