difference between balance of payment and balance of trade
Answers
Answer:
Balance of trade is the difference between exports of goods and imports of goods. Balance of payments is the difference between inflow of foreign exchange and outflow of foreign exchange. The net effect of balance of trade is either positive, negative or zero.
Answer:
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Explanation:
The balance of trade is a part of balance of payment. Balance of trade simply deals with the export and import of goods. Balance of trade doesn’t include any services (not even the import and export of services; we have a different name for that).
Balance of payment, on the other hand, is a much broader concept. It includes the balance of trade, the balance of services, balance of unilateral transfers, and balance of payment on capital account.
The idea behind the balance of payment is to see whether both sides match. In other words, we will see whether the total of both sides (debit and credit) will equal to zero (we will see the examples in later sections).