The balance of trade is the difference between a country's imports and its exports. A positive balance indicates that exports exceed imports (a trade surplus), while a negative balance indicates that imports exceed exports (a trade deficit).
Think about your monthly budget - if you spend more money than you earn, you'll have a deficit; but if you earn more than you spend, you'll have a surplus. It's similar with countries - they aim to export (earn) more than they import (spend) to achieve a trade surplus.
Trade Surplus/Deficit: A trade surplus occurs when the value of a country's exports exceeds that of its imports; conversely, a trade deficit occurs when imports exceed exports.
Exports/Imports: Exports are goods produced in one country and sold to another. Imports are goods bought by one country from another.
Exchange Rates: These are rates at which one currency can be exchanged for another. They affect the cost of importing goods and thus can impact the balance of trades.
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