What do you about Balance of Trade and Balance of Payment

What do you about Balance of Trade and Balance of Payment? Every country has to import and export goods and services. Import is the buying from a foreign country and export refers to selling abroad. The difference between import and export bill of a nation during a given period is known as balance of Trade / balance of Payment.

BALANCE OF TRADE Balance of Trade includes only flow of goods (visible items), ignoring services (invisible items) into or out of the country. Balance of Trade of a country will be positive or favorable it its exports exceed imports. The balance will be negative or unfavorable it its import bill is greater than export.

BALANCE OF PAYMENT Balance of Payment is an income and expense account of a country during a given period. It includes all flow of goods, services (visible and invisible items), current account and capital account items.  It gives a complete and detailed account and record of all types of imports and exports in the light of which a nation formulate it’s economic, industrial, and business policies greatly effecting its foreign trade and determines or adjust exchange rate of its currency.

If a country’s foreign receipts are greater than payments the balance of payment will be favorable, and if receipts are less than payments, the balance will be unfavorable.

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