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Question

Differentiate between balance of trade and current account balance.

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Solution

Difference between balance of trade and current account balance is as follows:

Balance of Trade Current Account Balance1.It is the difference between exports andIt is net value of balances of visible and ofimports of goods.invisible trade, and unilateral transfers.2.Balance of Trade includes only visibleCurrent account records both visible anditems.invisible items.3.It is a narrow concepts - it is onlyIt is a broader concept and it includes balance ofa part of current account balance.trade.


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