Question

The Balance of Trade (BOT) is defined as:

Options

• The difference between the value of exports and imports of goods and services combined

• The difference between receipts and payments of factor income from abroad

• The difference between the value of exports and imports of goods

• The sum of services, factor income, and unilateral transfers

Answer 1

The Balance of Trade (BOT) measures only the difference between the value of exports and imports of goods. Services, factor income, and unilateral transfers are excluded from the BOT and instead form the Balance on Invisibles.