Please give answer...
Dear student,
Balance of trade refers to the difference in the value of imports and exports of visible items only i.e., material goods or merchandise.
When the value of goods and services imported is more than the value of goods and services exported, it is called deficit in balance of trade.
The central government should can take following measures to make surplus in the balance of trade:
1. Reduction in tax rate- Government should reduce the tax rate on various factors of production so that cost of production can be reduced and goods produced in the country can compete with foreign goods in terms of cost.
2. Incentives- The government should provide incentives and subsidies for the business units which are involved in export of goods and services.
3. Non-tariff barriers- Government should remove or improve non-tariff barriers such as environmental, health and safety standards.
4. Trade agreements- Government should negotiate trade agreements. They can boost exports by reducing trade protectionism.
5. Lowering interest rates- Central Bank should lower interest rates so that loan can be available at lower cost. Hence, business can produce more goods and services.
In the ways mentioned above, central government can improve balance of trade.
Regards
Balance of trade refers to the difference in the value of imports and exports of visible items only i.e., material goods or merchandise.
When the value of goods and services imported is more than the value of goods and services exported, it is called deficit in balance of trade.
The central government should can take following measures to make surplus in the balance of trade:
1. Reduction in tax rate- Government should reduce the tax rate on various factors of production so that cost of production can be reduced and goods produced in the country can compete with foreign goods in terms of cost.
2. Incentives- The government should provide incentives and subsidies for the business units which are involved in export of goods and services.
3. Non-tariff barriers- Government should remove or improve non-tariff barriers such as environmental, health and safety standards.
4. Trade agreements- Government should negotiate trade agreements. They can boost exports by reducing trade protectionism.
5. Lowering interest rates- Central Bank should lower interest rates so that loan can be available at lower cost. Hence, business can produce more goods and services.
In the ways mentioned above, central government can improve balance of trade.
Regards