The difference between the value of a nation's net imports and net exports over a particular time interval is referred to as the balance of trade (BOT), sometimes known as the trade balance .
A trade surplus is indicated by a positive trade balance, whereas a trade deficit is indicated by a negative trade balance. The BOT is a crucial factor in defining a country's current account balance..
there are two account in BOP
1. Current account
a. visible item ( export and import of only goods )
b. invisible items ( export and import of only services )
c. unilateral transfers ( donations , gifts, grants etc )
d. factor income earned ( wages , interest , dividend etc)
NOTE : only visible and invisible items is considered in trade balance .
2. Capital account
a. borrowings and lending
b. FDI and FIIs
c. disinvestment etc .
Note : no items of capital account is a part of trade balance .
trade balance = value of exports - value of imports
here exports and imports mean of goods and services.
Country B trade balance as follows
export of goods and services = country A import of coffee from country B (EXPORT) +country B exports of shoes to country C .
total value of export = $4000+$6000
Export = $10,000
there is no import made by country B
therefore Import = 0
trade balance = export - import of goods and services
trade balance = 10,000 - 0
= $10,000 is the answer
1st transaction is not a part of visible and invisible items . it includes in factors income paid (interest) by country B . but it will not included in calculation .
same as in 2nd transaction
4th transaction is fall under unilateral transfer ( donations ) it also will not be included in calculation of trade balance .
5the transaction is also not a part of trade balance rather it falls under factors income (wages )
7the transaction is not a part of trade balance because it is included in capital account ( as financial investment or FIIs).
8the transaction is alo not a part of trade balance . it is part of capital account