Balance of Payment (BoP) & Balance of Trade

Balance of Payment

The balance of payments of a country is a systematic record of all economic transactions between the residents of a country and the rest of the world.

It helps to assess economic and financial status of a country in the short-term.

Components of BoP

(i) Visible items which include all types of physical goods exported and imported.

(ii) Invisible items which include all those services whose export and import are not visible. For example, transport services, medical services, etc.

(iii) Capital transfers which are concerned with capital receipts and capital payment.

(iv) Current Account Balance

  • BOP on current account is a ....
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