Question

What is meant by balance of trade and balance of payments?

Answer 1

Explanation:

The balance of trade of a country may not balance.

Only if the value of exports is equal to the value of imports, the balance of trade is said to be in equilibrium.

But the balance of payments always balances because every transaction must be settled. Hence total debits must be equal to the total credits.

Answer 2

Answer:

Balance of Trade or BoT is a financial statement that captures the nation's import and export of commodities with the rest of the world. Balance of Payment or BoP is a financial statement that keeps track of all the economic transactions by the nation with the rest of the world.