Question

Suppose the country of Lilliput exported 263 billion dollars worth of goods while they imported 477 billion dollars worth of goods in the last calendar year.
1) Calculate Lilliput\'s balance of trade:_____ billions of dollars.
2) Lilliput is running:_________.

a) a trade deficit
b) a trade surplus
c) neither a trade deficit nor a trade surplus

Answer 1

Answer:

1. -$214 billion

2. a trade deficit

Explanation:

1. The balance of trade denotes the difference between the exports and imports.

In mathematically,

Balance of trade = Exports - imports

So,

Balance of trade = $263 billion - $477 billion

                            = -$214 billion

2. As the balance of trade comes in a negative amount which represents that imports value is more than the exports value so it would be a trade deficit