Differentiate between balance of trade and current account balance.

Points 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 transactions

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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