Q.Distinguish between Balance of Trade and Balance of Payments.

One of these two terms is often used loosely to mean the other, but they cover very different scopes of a country's international transactions. …

Balance of Trade (BOT) records only the value of a country's visible (merchandise) exports and imports — physical goods crossing the border. If exports exceed imports, it is a favourable/surplus balance of trade; if imports exceed exports, it is unfavourable/deficit.

Balance of Payments (BOP) is a far broader and more systematic record, covering every economic transaction between a country's residents and the rest of the world in a given period. It includes the balance of trade as just one part of its Current Account (alongside services and income and transfers), and additionally includes the Capital Account (investment flows, external loans, reserve changes) — categories the Balance of Trade does not touch at all. …

Using 'Balance of Trade' and 'Balance of Payments' interchangeably in everyday language — in economics they are precisely distinct, with BOT b …