State whether the following statements are true or false.
2. The difference between a country's exports and imports is termed as net earnings from foreign transactions.
Answer: True. Net earnings from foreign transactions of a country refers to the difference between the demand for domestically produced goods and services by the rest of the world (exports) and the demand for goods and services produced abroad by the residents of that country. In other words, it is the difference between the exports and imports. That is,
Net earnings from foreign transactions = Total exports – Total imports
