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GCE Commerce 1989 Question 40

Question 40

Foreign Trade

A deficit in the balance of trade occurs when

  1. A.visible exports exceed visible imports
  2. B.total payments exceed visible exports
  3. C.visible imports exceed visible exports
  4. D.invisible exports exceed invisible imports
  5. E.visible exports exceed invisible imports.
Show the answer and explanation

Answer: C (visible imports exceed visible exports)

Explanation

Balance of trade compares visible exports and imports; it is in deficit when visible imports are greater.