differentiate between balance of trade and balance of payment - Economics - Open Economy Macroeconomics

Question

differentiate between balance of trade and balance of payment

Damini Nirvan · Answer

BASIS FOR COMPARISON
BALANCE OF TRADE
BALANCE OF PAYMENT

Meaning
Balance of Trade is a statement that captures the country's
export and import of goods with the remaining world
Balance of Payment is a statement that keeps track of all
economic transactions done by the country with the remaining
world

Records
Transactions related to goods only
Transactions related to both goods and services are
recorded

Capital Transfers
Are not included in the Balance of Trade
Are included in Balance of Payment

Which is better?
It gives a partial view of the country's economic status
It gives a clear view of the economic position of the
country

Result
It can be Favorable, Unfavorable or balanced
Both the receipts and payment sides tallies

Component
It is a component of Current Account of Balance of Payment
Current Account and Capital Account

BASIS FOR COMPARISON	BALANCE OF TRADE	BALANCE OF PAYMENT
Meaning	Balance of Trade is a statement that captures the country's export and import of goods with the remaining world.	Balance of Payment is a statement that keeps track of all economic transactions done by the country with the remaining world.
Records	Transactions related to goods only.	Transactions related to both goods and services are recorded.
Capital Transfers	Are not included in the Balance of Trade.	Are included in Balance of Payment.
Which is better?	It gives a partial view of the country's economic status.	It gives a clear view of the economic position of the country.
Result	It can be Favorable, Unfavorable or balanced.	Both the receipts and payment sides tallies.
Component	It is a component of Current Account of Balance of Payment.	Current Account and Capital Account.