What is a trade surplus?

A trade surplus occurs when a country exports more goods and services than it imports. This scenario is indicative of a strong economy because it means the country is selling more to other countries than it is buying from them, which can contribute positively to the national income and support job growth in export-driven industries.

When exports exceed imports, it reflects a higher demand for domestic products in international markets, which can enhance the overall economic health of the country. This surplus can lead to increased foreign currency reserves, giving the country more leverage in international trade and finance.

The other options highlight different concepts related to trade but do not accurately define a trade surplus. For example, a situation where imports exceed exports represents a trade deficit, not a surplus. Favorable trade agreements can influence trade balances but are not a definition of a trade surplus itself. Investing abroad represents capital flows rather than the measurement of goods and services traded, which is not relevant to the definition of a trade surplus.