Question 1

Differentiate between balance of trade and current account balance.

Answer

Point of Difference	Balance of Trade	Current Account Balance
Definition	It is the difference between the values of exports and imports of goods of a country.	It is the difference between the values of exports and imports of goods, services and unilateral transfers of a country.
Components	1. Export of goods 2. Import of goods	Export and import of goods, export and import of services, unilateral transfers.
Nature of Transaction	It records transactions related to visible items (i.e. goods) only.	It records the transactions related to visible items (goods) as well as invisible items (services) and unilateral transfers.

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