What does the term "trade surplus" refer to?

The term "trade surplus" refers to a situation where a country's exports exceed its imports. This indicates that a country is selling more goods and services to other countries than it is purchasing from them, resulting in a net inflow of money from trade. A trade surplus is often viewed as a positive indicator of a country's economic health, as it may reflect a strong production capacity, competitive industries, or a favorable balance of payments.

In contexts like international trade, having a trade surplus can lead to increased foreign reserves, which provides more resources for investments and can strengthen a country's currency. This concept is fundamental to understanding international economics and trade dynamics, as surpluses and deficits can impact global relations and economic strategies.