Question

Define Balance of Payment. Explain the main items of balance of payment.

Answer 1

Explanation:

The balance of payments, also known as balance of international payments and abbreviated B.O.P. or BoP, of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period of time (e.g., a quarter of a year).

A balance of payments deficit means the country imports more goods, services and capital than it exports. It must borrow from other countries to pay for its imports. ... A balance of payments surplus means the country exports more than it imports.

Answer 2

✰Balance Payment :

The account of receipts and payments of the government of one country from the other countries during a period of one year is called balance of payments.

✰According to Kindleberger, ' Balance of payments is a systematic record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time.'

✰Main Items of Balance of Payments :

The main items of balance of points can be divided into two categories :

1) Items of current account : The main items of current account are :

a) The import and export of visible items like machinery, tea, tobacco, etc. The difference between such exports and imports is known as trade balance.

b) The import and export of invisible items like services of insurance companies, banks, doctors, engineers, government transactions, donations, tourism and shipping, etc.

2) Items of capital account : The capital account is made up of such terms as the inward and outward flow of money for investment and international grants and loans.