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Favorable Balance 0f Trade and Unfavorable Balance 0f Trade When asked about the affects of Favorable Balance 0f Trade and Unfavorable Balance 0f Trade to a country, different people will have different opinions. Some people take it for granted that Favorable Balance 0f Trade has many influence to a country. However others argue that Unfavorable Balance 0f Trade has more influence for a country. Those people who hold the first opinion believe that Favorable Balance 0f Trade stand for the foreign trade is in a favorable position in that years, the size of the Favorable Balance 0f Trade reflects the foreign trade activity status in a given year for a country. In addition, they insist that Favorable Balance 0f Trade could increase foreign exchange reserves, especially increasing the gold reserves. What’s more, it is benefit for the development of the domestic economy and largely improve the employment rate. Above mentioned are Favorable Balance 0f Trade’s advantages. But it also has many disadvantages. First, if a country is in the Favorable Balance 0f Trade situation for a long-term, it would lead to friction with other countries. The Favorable Balance 0f Trade increased the foreign exchange reserves, but the resources are not fully utilized. Second, sustained Favorable Balance 0f Trade would lead to the RMB rise in value. Third, it is the key factor for increasing inflation Rate. All in all, the Favorable Balance 0f Trade has many infections for a country, both the advantages and the disadvantages. However, still others think differently. In their opinion, Unfavorable Balance 0f Trade has more affects to a country. It reflects the imports over than the exports in a year for a country. It represents it at a disadvantage position during that time. Thus the government should avoid the unfavorable position, because it would result in the domestic resources outflow and reduce the Foreign exchange, worse more, increasing the external debt. The situation will also affect