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Finance: What is Balance of Trade? 14 Views
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Description:
What is Balance of Trade? Balance of trade is just the difference between imports and exports in a country. When imports outweigh exports, there is a deficit. When exports outweigh imports, there is a surplus. Typically, deficits are bad and surpluses are good.
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Transcript
- 00:00
Finance a la shmoop... what is balance of trade...up, down, up, down yeah all right [Squirrels riding a see-saw]
- 00:10
think of balance of trade the same way you would think of that seesaw in your
- 00:14
schoolyard instead of the big-boned third-grader
- 00:17
weighing in against the you know waiting to grow kindergartner when it comes to [Ship sailing out of harbor]
- 00:21
international economies and the goods they buy and sell from into each other
Full Transcript
- 00:25
we have exports this guy and imports this guy if two countries have a balance
- 00:30
in trade well then the financial weight on this seesaw thing here is even the
- 00:35
three future NFL linemen weigh about the same as eleven future tax auditors yeah [Linemen players and tax auditors in a see-saw]
- 00:41
but that's rarely the case when countries trade among each other
- 00:45
and if you're on the seesaw you want to be heavy like fat with feet firmly
- 00:50
planted on the ground where you are exporting or selling to another country [Goods travelling to foreign countries]
- 00:54
a whole lot more stuff than you're importing what you want is to be
- 00:58
collecting boatloads of their currency or oil or velcro kilts from Scotland and
- 01:04
as you capture more and more of their trade or wealth [Wealth sucked into the US]
- 01:08
the powerful imbalanced one well that'd be you here you get to have more and
- 01:13
more influence on them and the world they live in is there a way to gain this
- 01:18
system cheat? well sorta yeah politicians and governments get very nervous when
- 01:23
the balance of trade is not in their favor and they have the ability to pile [Imports and exports pile on a see-saw]
- 01:26
a bunch of books on their side of the seesaw to help their skinny accountants
- 01:31
compete better how do they do this magic you ask okay yeah we know you didn't ask
- 01:35
but we'll tell you anyway they smack a tax on goods they import from you like
- 01:41
the US government in the middle of our loss of dominion over the auto industry [Auto industry logos land in a seesaw]
- 01:45
to Japan and Korea and Germany well we placed a big fat tax on foreign cars
- 01:50
being imported into the US and we still lost the war there so yeah the seesaw ie
- 01:56
the balance of trade isn't always fair and by the way if you ever see this guy
- 02:00
coming run at least feed him [Man running in a park]
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