How Does the Balance of Payments Differ from the Balance

question 21

Multiple Choice

How does the balance of payments differ from the balance of trade?

• A) The two concepts should yield the same value, because the value of goods traded must equal the total payments made to buy those goods.
• B) The balance of payments includes the balance of trade, but it also includes other financial flows, such as foreign borrowing and lending.
• C) The balance of trade includes exports and imports only of goods, while the balance of payments includes exports and imports of both goods and services.
• D) These two concepts are totally unrelated, so comparing them is not really meaningful.