Question

A Balance of Trade deficit exists when:

Options

• \[ V_{x} > V_{m} \]

• \[ V_{x} = V_{m} \]

• \[ V_{m} - V_{x} = 0 \]

• \[ V_{m} > V_{x} \]

Answer 1

A BoT deficit occurs when the value of goods imported (V_m) exceeds the value of goods exported (V_x), i.e., V_m > V_x. Since BoT = V_x − V_m, a negative value of BoT indicates a deficit.