Question

A BOT (Balance of Trade) deficit occurs when:

Options

• Exports = Imports

• Imports > Exports

• Exports > Imports

• Receipts of unilateral transfers exceed payments of unilateral transfers

Answer 1

A BOT deficit arises when the value of imports of goods exceeds the value of exports of goods (Imports > Exports). The BOT covers only goods, so services, factor income, and transfers play no role in determining a trade surplus or deficit.