Which term describes circumstances where a country's exports exceed its imports?

• A. Trade surplus
• B. Comparative advantage
• C. Balance of payments
• D. Trade deficit

Answer: (A)

Verified step by step guidance

1. Understand the key terms related to international trade balances: 'Trade surplus', 'Trade deficit', 'Comparative advantage', and 'Balance of payments'.
2. Recall that a 'Trade surplus' occurs when the value of a country's exports is greater than the value of its imports.
3. Recognize that a 'Trade deficit' is the opposite situation, where imports exceed exports.
4. Know that 'Comparative advantage' refers to a country's ability to produce goods at a lower opportunity cost, not directly related to the trade balance.
5. Understand that 'Balance of payments' is a broader accounting record of all economic transactions between residents of a country and the rest of the world, which includes the trade balance but is not the specific term for exports exceeding imports.