What is a country's balance of (merchandise) trade, and why is it so widely reported in the financial and popular press?
What will be an ideal response?
Answer: The balance of trade (BOT) is the largest and most important subset of a country's current account. It measures the difference in a country's imports and exports over a specified time period. It is often reported because it is intuitively easy to understand (i.e., we either sell more or buy more from foreign countries) and it is a reasonable representation of the total current account balance. (For example, for the U.S. the BOT was -$343B in 1999 while the current account balance was -$331B.
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