Explain Balance of Payments (BOP). What do you mean by balance of paym

1.	Explain Balance of Payments (BOP). What do you mean by balance of payment surplus and balance of payment deficit?
Answer» Balance of trade is the record of a country’s visible export and visible imports. It includes only visible trade and excludes invisible trade of services. However, balance of payment is a more comprehensive term which denoted a country’s total monetary transactions with the rest of the world. It includes both visible and invisible trade of goods and services. The balance of payments (BOP) records the transactions in goods, services and assets between residents of a country with the rest of the world. There are two main accounts in the BOP – the current account and the capital account. When the total receipt is larger than the payment the balance of payment is said to be surplus. On the other hand when payments are larger than receipts, balance of payments is said to be deficit.

Explain Balance of Payments (BOP). What do you mean by balance of payment surplus and balance of payment deficit?

Answer»

Balance of trade is the record of a country’s visible export and visible imports. It includes only visible trade and excludes invisible trade of services. However, balance of payment is a more comprehensive term which denoted a country’s total monetary transactions with the rest of the world. It includes both visible and invisible trade of goods and services.

The balance of payments (BOP) records the transactions in goods, services and assets between residents of a country with the rest of the world. There are two main accounts in the BOP – the current account and the capital account.
When the total receipt is larger than the payment the balance of payment is said to be surplus. On the other hand when payments are larger than receipts, balance of payments is said to be deficit.

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