BALANCE OF PAYMENT by Shalini

Trade: Exchange of goods and services with other nations. Export Goods and services sold to other countries Import Goods and services bought from other countries

In addition, trading involve exchange of Visible and invisible goods Visible goods: Are the material goods exported and imported. Invisible products: Are the non merchandise item.

Balance of Trade It is the difference between the monetary value of exports and imports in an economy over a certain period of time (only visible goods).

Balance Of Payment Balance of payment takes into account both the invisible and visible items.

Components Of BOP Current Account Capital Account

Current Account The current account refers to balance in flow of goods and services and other current receipts and payments.

Capital Account Export and Import of capital and the difference between the two represent countries capital account balance Eg Foreign investment and loans

BOP Disequilibrium-Factors Disequilibrium occurs due to deficit and surplus. Economic factors Political Factors Social Factors

CONCLUSION Balance of payment represents a better picture of a country’s economic and financial transaction with the rest of the world.

Reference International Business Environment by Francis Cherunilam Macroeconomic Policy Environment by Shyamal Roy