This document discusses the balance of payments and balance of trade. It defines the balance of payments as the record of all economic transactions between a country and the rest of the world, including trade, investment income, and capital flows. It has three components: the current account, capital account, and financial account. The current account covers trade in goods and services, while the capital account covers international investment and loans. The balance of trade is the difference between a country's exports and imports of goods; it is the largest part of the current account. The document compares the key differences between the balance of trade and balance of payments.
This document discusses the balance of payments and balance of trade. It defines the balance of payments as the record of all economic transactions between a country and the rest of the world, including trade, investment income, and capital flows. It has three components: the current account, capital account, and financial account. The current account covers trade in goods and services, while the capital account covers international investment and loans. The balance of trade is the difference between a country's exports and imports of goods; it is the largest part of the current account. The document compares the key differences between the balance of trade and balance of payments.
This document discusses the balance of payments and balance of trade. It defines the balance of payments as the record of all economic transactions between a country and the rest of the world, including trade, investment income, and capital flows. It has three components: the current account, capital account, and financial account. The current account covers trade in goods and services, while the capital account covers international investment and loans. The balance of trade is the difference between a country's exports and imports of goods; it is the largest part of the current account. The document compares the key differences between the balance of trade and balance of payments.
This document discusses the balance of payments and balance of trade. It defines the balance of payments as the record of all economic transactions between a country and the rest of the world, including trade, investment income, and capital flows. It has three components: the current account, capital account, and financial account. The current account covers trade in goods and services, while the capital account covers international investment and loans. The balance of trade is the difference between a country's exports and imports of goods; it is the largest part of the current account. The document compares the key differences between the balance of trade and balance of payments.
Associate Professor Faculty of commerce Govt. Degree College Maldevta, Raipur Dehradun WHAT IS BALANCE OF PAYMENT? • BALANCE OF PAYMENTS (the sum total of all economic transactions between one country and its trading partners around the world), which includes capital movements (money flowing to a country paying high interest rates of return), loan repayment, expenditures by tourists, freight and insurance charges, and other payments • The balance of payments is a statement of all transactions that are made between entities in one nation and rest of the world • Over a particular time frame, such as a quarter or a year. • To put it in other words, the BoP is a set of accounts that identifies all the commercial transactions. • It documents a record of all the monetary transactions performed globally by the nation on goods, services and income during the year. • The balance of payments is the difference between the inflow of foreign exchange and the outflow of foreign exchange. COMPONENTS OF BALANCE OF PAYMENT • There are three components of balance of payment viz: • current account, • capital account, • and financial account. The total of the current account must balance with the total of capital and financial accounts in ideal situations The current account represents a country's net income over a period of time, while the capital account records the net change of assets and liabilities during a particular year. DIFFERENCE BETWEEN CURRENT ACCOUNT & CAPITAL ACCOUNT CURRENT ACCOUNT CAPITAL ACCOUNT The current account deals with a country's short-term transactions or The capital account is a record of the inflows and outflows of capital the difference between its savings and investments. that directly affect a nation’s foreign assets and liabilities.
These are also referred to as actual transactions output and It is concerned with all international trade transactions between employment levels through the movement of goods and services. citizens of one country and those in other countries.
The current account consists of visible trade, invisible trade , unilateral The capital account flow reflects factors such as commercial transfers, and investment income such as land or foreign shares. borrowings, banking, investments, loans, and capital.
The resulting balance of the current account is approximated as the The capital account is concerned with payments of debts and claims, sum total of the balance of trade. regardless of the time period.
Exports of Goods and Services > Imports of Goods and Net Capital Inflow ⇒ Capital Account Surplus services ⇒ Current Account Surplus Net Capital Outflow ⇒ Capital Account Deficit Exports of Goods and Services < Imports aof Goods and Services ⇒ Current Account Deficit WHAT IS BALANCE OF TRADE?
• The balance of trade is the distinction between the value of a nation’s imports and exports for a given time frame. • The BoT is the largest constituent of a nation’s balance of payments. • Economists utilise the BoT to compute the associative potency of a nation’s economy. • The BoT is also known as the trade balance or the international trade balance • The balance of trade is the difference between exports of goods and imports of goods. • The net effect of balance of trade is either positive, negative or zero. FEATURES OF BALANCE OF TRADE:
• Various features of balance of trade have been explained below:
• Exports and Imports
• Visible Goods
• Material Goods TYPES OF BALANCE OF TRADE FAVOURABLE BoT
UNFAVOURABLE/ DEFICIT BoT
EQUILIBRIUM IN BoT Difference Between BoT & BoP Basis Balance of Trade Balance of Payment
Meaning Balance of Trade or BoT is a financial Balance of Payment or BoP is a financial
statement that captures the nation’s statement that keeps track of all the and export of commodities with the rest of economic transactions by the nation with the world. rest of the world. Records Goods related transactions. Transactions associated to both goods and services. Capital Not included in BoT. Included in BoP. Transfers Which is Just a partial view of the nation’s economic A clear and complete view of the nation’s better? status is furnished. economic status is furnished.
Result BoT can either be favourable, Both the receipts and payments sections or balanced. tallies.
Compone Component of Current Account of the Both Current and Capital account. nt Balance of Payment. THANK YOU
Balance of Payment (BOP) Is A Statement That Records All The Monetary Transactions Made Between Residents of A Country and The Rest of The World During Any Given Period
Balance of Payment (BOP) Is A Statement That Records All The Monetary Transactions Made Between Residents of A Country and The Rest of The World During Any Given Period
