Q.What is meant by a 'Favourable' and an 'Unfavourable' Balance of Trade?

Whether a country's Balance of Trade is favourable or unfavourable depends simply on which of exports or imports is larger. …

The Balance of Trade is the difference between the value of a country's visible exports and visible imports over a period. When the value of a country's EXPORTS exceeds the value of its IMPORTS, the Balance of Trade is called FAVOURABLE (or a surplus), since the country earns more from selling goods abroad than it spends on buying goods from abroad. Conversely, when the value of a country's IMPORTS exceeds the value of its EXPORTS, the Balance of Trade is called UNFAVOURABLE (or a deficit), since the country spends more on buying goods from abroad than it earns from selling goods abroad. India's Balance of Trade has typically been …

Students sometimes assume 'favourable' always means good for the economy in every respect — in reality a surplus can also reflect weak domestic demand for imports, so the term strictly describes the …