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Balance of Payment is a more wider term than Balance of Trade. Explain. |
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Answer» Every country imports and exports goods and services. Out of these, certain items are visible and certain items are invisible. The value of visible items is included in balance of trade, whereas balance of payment is a wider concept. In this, visible and invisible both items are included. Invisible items include services like banking, insurance and technological knowledge, etc. The payment of these services is made between the coutries, but not recorded at ports. Along with it, capital account is also included. According to Sodersten : “Balance of payment is a method to record the payments for international transactions for any country”. Therefore, Balance of Payment is a more wider term than Balance of Trade, because in this, both visible and invisible items are included. |
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