How does the balance of payments differ from the balance of trade?
A) The two concepts should yield the same value, because the value of goods traded must equal the total payments made to buy those goods.
B) The balance of payments includes the balance of trade, but it also includes other financial flows, such as foreign borrowing and lending.
C) The balance of trade includes exports and imports only of goods, while the balance of payments includes exports and imports of both goods and services.
D) These two concepts are totally unrelated, so comparing them is not really meaningful.

Question

Quizplus · Accepted Answer

The balance of payments includes the balance of trade, but it also includes other financial flows, such as foreign borrowing and lending. The balance of trade only considers the trade of goods, while the balance of payments considers all types of financial transactions between a country and the rest of the world.

How Does the Balance of Payments Differ from the Balance