Question

Distinguish between balance of trade and balance an current account

Answer 1

The balance of payments (BOP) is the record of any payment or receipt between one nation and its nationals with any other country. The current account, the capital account and the financial account make up a country's balance of payments. Together, these three accounts tell a story about the state of an economy , its economic outlook and its strategies for achieving its desired goals. A large volume of imports and
exports, for example, can indicate an open economy that supports free trade. On the other hand, a country that shows little international activity in its capital or financial account may have an underdeveloped capital market and little foreign currency entering the country in the form of foreign direct investment.
A current account records the flow of goods and services in and out of a country, including tangible goods, service fees, tourism receipts and money sent directly to other countries, either given as aid or sent to families. A financial account is used to measure the increases or decreases in international ownership assets that a country is associated with, while the capital account is used to measure the capital expenditures and overall income of a country.