Trade balance. In the given year, observing items 1 and 2 in Table T. 14.1 we find that the USA

merchandise exports of $251 billion did not earn the United States enough foreign monies to finance

American merchandise imports of $410 billion. Specifically, the merchandise balance of trade or, more

simply, the trade balance refers to the difference between a country’s merchandise exports and merchandise

imports. If exports exceed imports, then a trade surplus or “favorable balance of trade” is being

realized. If imports exceed exports, then a trade deficit or “unfavorable balance of trade” is occurring. In

the given year, we note in item 3 that the United States incurred a trade deficit of $159 billion.

Balance on goods and services. Item 4 tells us that the United States not only exports autos and

Computers, but also sells transportation services, insurance, and tourist and brokerage services to

residents of foreign countries. These service sales or “exports” amounted to $70 billion in the given

year. Item 5 merely indicates that Americans buy or “import” similar services from foreigners.

These service imports amounted to $72 billion.

The balance on goods and services, shown in Table T. 14.1 as item 6, refers to the difference between

The exports of goods and services (items 1 and 4) and the imports of goods and services (items 2 and 5).

American exports of goods and services fell short of the imports of goods and services by $ 161 billion.