Question

The relationship between the values of a country's imports and its exports is called.

• A. \( \text{Balance of Trade} \)
• B. \( \text{Balance of Payment} \)
• C. \( \text{Balance of currency} \)
• D. \( \text{Bill of exchange} \)

Hint:

\textbf{Key Economic Terms.} It's important to distinguish between related economic terms. Balance of Trade is a component of the broader Balance of Payment. Understanding the scope of each term helps in answering such questions accurately.

Answer 1

The Correct Option is A

The relationship between the value of a country's imports and its exports over a period of time is known as the Balance of Trade (BOT). It represents the difference between the monetary value of a nation's exports and imports. Let's briefly look at the other options to understand why they are not the correct answer:
Balance of Payment (BOP): The Balance of Payment is a broader statement that records all economic transactions between the residents of a country and the rest of the world over a specific period. It includes the balance of trade, net income from abroad, net current transfers, and capital account transactions.
Balance of currency: This term is not a standard economic term used to describe the relationship between imports and exports.
Bill of exchange: A bill of exchange is a written order by a drawer to a drawee to pay a certain sum of money to a payee on a specified date or on demand. It is a financial instrument used in international trade but does not represent the overall relationship between a country's imports and exports. Therefore, the correct answer is Balance of Trade, which specifically focuses on the value of imports and exports of a country.