What does a trade surplus indicate about a country’s economy?

A trade surplus occurs when a country exports more goods and services than it imports. This situation reflects a positive economic scenario for the country, suggesting that it is producing more for the international market than it is consuming from abroad. A trade surplus can indicate strong domestic production capabilities and competitive industries that can sell goods outside their borders, often leading to an inflow of foreign currency. This inflow can contribute to a stronger national currency and potentially stimulate further economic growth.

The other options do not adequately describe a trade surplus. A scenario of more imports than exports would indicate a trade deficit, which signifies that the country is consuming more foreign goods than it is selling abroad. Equal exports and imports suggest a balanced trade situation, where there is no surplus or deficit. High levels of debt may influence trade balances but do not directly define a trade surplus; instead, they concern the overall financial health of the country. Thus, the essence of a trade surplus is accurately captured by the notion of more exports than imports.