Enumerate the ways in which nation can overcome an unfavorable balance of trade?

Answer 1

improve technology is one

Answer 2

sir usman will tell you :P

Answer 3

1. Raising import tariffs

2. Setting a quota on the number of goods that can be imported.

3. Being more productive and specialize in goods unavailable in other countries. Or provide at a lower cost than competing countries.

Answer 4

balance of payment always balances, since each credit in the account has a corresponding debit. However, this does not mean that each of the individual accounts that make-up the balance of payment is necessarily in balance. For instance the current account can be in surplus while the capital account is in deficit.

Economist make a distinction between autonomous (above line item) and accommodating (below the line) items. The autonomous items are transactions that take place independently of the balance of payments. While accommodating items are those transactions which finance any difference between autonomous receipts or payment.

Surplus in the balance of payment is defined as excess of autonomous receipts over autonomous payment. The deficit is an excess of autonomous payment over autonomous receipts. That is,

• Autonomous receipts > Autonomous payment = Surplus

• Autonomous receipts < autonomous payment = Deficit

The major issues raised here is that which items are categorized in autonomous and which one in a commendation items. There is no agreement among economists as to the classification of items in to autonomous and accommodating category. Disagreement on which items qualify as autonomous and which are not leads to alternative views on what constitute a balance of payment surplus or deficit. Here under some of the most important of these concepts are reviewed.