Question

State with reason whether you agree or disagree with the following statement:

There is no difference between Balance of Payment and Balance of Trade.

Answer 1

I disagree with this statement.

Reason:

1. Balance of payments is a systematic record of all international economic transactions of a country during a given period, usually a year.
2. On the other hand, the balance of trade refers to the difference between the value of a country’s exports and imports for a given period.
3. The balance of payments is a broader concept than the balance of trade.
4. The balance of payments includes the value of the exchange of goods and services among citizens, businesses, firms, and the government.
5. The balance of trade includes the value of imports and exports of visible and invisible goods.

Therefore, the balance of payments and the balance of trade are two different concepts.