International TradeMTP - June 2023 (Inter)Question 180 of 20
All Questions

Balance of Trade refers to:

Options

AExport - Import of Goods
BExport - Import of Services
CBalance of Payment
DCapital Account
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option a — Export - Import of Goods

All Options:

  • AExport - Import of Goods
  • BExport - Import of Services
  • CBalance of Payment
  • DCapital Account

Detailed Solution & Explanation

To understand the concept of Balance of Trade, we need to break it down into its components. • The Balance of Trade is a part of the Balance of Payments, which is a statistical statement that summarizes a country's economic transactions with the rest of the world over a specific period. • It specifically refers to the difference between the value of goods exported and the value of goods imported by a country. • This concept is based on the principle of international trade, where a country's trade balance is determined by the value of its exports minus the value of its imports. The correct answer is based on the definition of Balance of Trade, which focuses on the trade of goods. • Options that include services or other components of the Balance of Payments, such as capital accounts, are not correct because they are not specific to the trade of goods. • For example, option B is incorrect because it refers to the trade of services, which is a separate component of the Balance of Payments.

About This Chapter: International Trade

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Theories, Trade Policy, Exchange Rates

This chapter explores trade between nations — why countries trade, the theories of Absolute and Comparative Advantage, Balance of Payments, Exchange Rate systems (Fixed vs Flexible), and India's trade policy including tariffs, quotas, and WTO rules.

View Official ICAI Syllabus

Exam Strategy Tip

Understand Comparative Advantage theory thoroughly — it's the foundation of international trade. Also focus on the Balance of Payments structure and what causes deficits.

More Questions from International Trade

Exchange rate determined by market forces is called:

Tariffs generally:

WTO was established in:

Devaluation of currency encourages:

Comparative Cost Advantage theory was given by:

Heckscher-Ohlin theory explains trade based on:

Ready to Master International Trade?

Practice all 20 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free