1. Balance of Trade

2. Merchandise Trade Balance
The gap between exports and imports if goods only
Not services
Not other payments between countries
Exports > Imports—Trade Surplus
Exports < Imports—Trade Deficit
About 30 years ago we had ship and planes filled with cargo and this was important
But today we have call centers in India, movies over the internet and others that make the merchandise trade balance seem limitd

3. Current Account Balance
The single statistic that captures the most comprehensive picture of a nation’s balance of trade
Goods
Services
Net Exports or Commercial Balance
Net primary income or factor income
Earnings on foreign investments
Net unilateral transfers

4. Current Account Balance
Exports/Credit
Imports/Debit
Balance
Merchandise trade
$713 billion
$1,261 billion
-$548 billion
Services trade
$307 billion
$256 billion
$51 billion
Investment income
$294 billion
$261 billion
$33 billion
Unilateral transfers
-$67 billion
TOTAL
-$531 billion

5. Trade Deficit
When the trade balance is zero then the flow of funds out is equal to the flow of funds in
We have a deficit which mean dollar are flowing out of the country
We were importing and there was not a corresponding flow back in sufficient to offset our imports