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Open Economy Macroeconomics — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsOpen Economy Macroeconomics3 Marks
Question
Differentiate between balance of trade and current account balance.
✓

Answer

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
(i) Export of goods.
(ii) 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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