Question

Distinguish between balance of trade and balance of invisibles in the balance of payments.

Answer 1

Aspect	Balance of Trade (BoT)	Balance of Invisibles (BoI)
Definition	Difference between export and import of visible goods	Difference between export and import of invisible items
Nature of Items	Tangible / Physical goods	Intangible items (services, transfers, incomes)
Recorded In	Part of the current account of the balance of payments.	Part of the current account of the balance of payments.
Components	Includes visible trade such as goods like machinery, oil, tea, etc.	Includes visible trade such as goods like machinery, oil, tea, etc.
Examples	Machinery, petroleum, textiles, vehicles	Tourism, IT services, remittances, interest, and dividends.