BANKING AFFAIRS

Detailed explanation-1: -The balance of trade is a part of the balance of payments and is represented in the current account, which also includes income from investments and transfers such as foreign aid and gifts. The capital account, which is another part of the balance of payments, includes financial capital and financial transfers.

Detailed explanation-2: -Balance of trade refers to the balance occurring on account of export and import of visible items (goods only). Current account balance includes the balance of trade well as balance on invisible items.

Detailed explanation-3: -Measuring the current account The current account balance is then the trade balance plus net factor income (such as interest and dividends from foreign investments or workers’ remittances) and transfers from abroad (such as foreign aid), which are usually a small fraction of the total.

Detailed explanation-4: -The Current Account In economic analysis or commentary, most attention is usually given to the trade balance, which records the difference between the value of our exports and imports of goods and services.

Detailed explanation-5: -Therefore, the formula for calculating the balance of trade or BOT is as follows: Balance of trade (BOT) = Value of Exports − Value of Imports Where, BOT is the Balance of trade or trade balance. Value of exports is the value of goods that are exported out of the country and sold to buyers of other countries.