Define Balance of Trade and Balance of Payments.What is the different between these two terms? Why are they important measures?

Question

Quizplus · Accepted Answer

The Answer is A nation's balance of trade is the difference in value between its exports and imports.The difference between the flow of money into and out of a country is called its balance of payments.The balance of payments is a much broader measure because it also takes into account foreign investments,foreign aid,loans,military expenditures,and money spent by tourists.It is important for nations to pay attention to both of these measures,as they can indicate economic health or weaknesses.A country with a highly negative balance of trade or of payments may be concerned about liquidity issues and the health of its overall economy.