Question

Distinguish between Balance of Trade and Balance of Payments.

Answer 1

Sr no	Balance of Trade:	Balance of Payments:
1	Balance of Trade refers to the total value of a country’s exports of commodities and the total value of imports of commodities.	Balance of payments is a systematic record of a country’s economic and financial transactions with the rest of the world over a period of time.
2	Only export and import of commodities are included in the statement of Balance of Trade of a country.	The principal items shown on the credit side are exports of goods and services, transfer receipts in the form of gifts, etc.
3	The Balance of Trade between the values of goods exchanged between two countries.	The Balance of payments between the values of goods and services changed between two countries.
4	Balance of Trade is a merchandise item or visible items only.	Balance of payments is a both visible and non – visible items.