What does a positive trade balance indicate about a country's economy?

A positive trade balance signifies that a country exports more goods and services than it imports. This surplus in exports can indicate a robust economic environment as it suggests that the country's products are in demand overseas, potentially leading to increased production and employment within its borders. A favorable trade balance can strengthen the country's currency since greater demand for exports necessitates purchasing that country's currency, leading to appreciation. Additionally, a positive trade balance can enhance the country’s financial reserves and provide opportunities for investment in domestic projects.

In contrast, a negative trade balance would indicate that imports exceed exports, which can put pressure on the country’s currency and reflect potential economic weaknesses. The remaining choices either misinterpret the relationship or present alternate economic scenarios that do not directly reflect the implications of a trade balance in isolation.