Question

Differentiate between balance of trade and current account balance.

Answer 1

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

$\begin{array}{ccc}& \text{Balance of Trade}& \text{Current Account Balance}\\ 1.& \text{It is the difference between exports and}& \text{It is net value of balances of visible and of}\\ & \text{imports of goods.}& \text{invisible trade, and unilateral transfers.}\\ 2.& \text{Balance of Trade includes only visible}& \text{Current account records both visible and}\\ & \text{items.}& \text{invisible items.}\\ 3.& \text{It is a narrow concepts - it is only}& \text{It is a broader concept and it includes balance of}\\ & \text{a part of current account balance.}& \text{trade.}\end{array}$