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Question
Answer the following question.
Define "Trade surplus". How is it different from "Current account surplus"?
Solution
Trade surplus refers to the situation when exports of goods and services exceed the import of goods and services.
Exports of Goods and Services > Imports of Goods and Service ⇒ Current Account Surplus
Trade surplus is different from "Current Account Surplus". This is because current account is the account which maintains the records of imports and exports of goods and services as well as the record of unilateral transfers.
Current Account Balance = Balance of Visible Trade + Balance of Invisible Trade + Balance of Unilateral Transfers.
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