Net exports (NX) are exports minus imports. A negative NX implies:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → a trade deficit
A negative NX means imports are greater than exports. That is a trade deficit. A positive NX would mean a trade surplus.
NCERT (2026-27): “National Income Identity for an Open Economy … where, NX is net exports (exports – imports). A positive NX (with exports greater than imports) implies a trade surplus and a negative NX (with imports exceeding exports) implies a trade deficit. …” |