Write any one difference between balance of trade and balance of payment.

The balance of trade refers only to the visible trade (exports and imports of physical goods) between a country and the rest of the world. It is calculated as:

$$\text{Balance of Trade}=\text{Value of Exports}-\text{Value of Imports}$$

On the other hand, the balance of payments (BoP) is a broader accounting record that includes not only trade in goods but also:

• Invisible trade (services like tourism, banking, insurance, etc.),
• Capital movements (investments, loans, foreign aid),
• Transfer payments (remittances, grants).

Thus, while the balance of trade focuses solely on merchandise trade, the balance of payments encompasses all economic transactions between a country and the rest of the world.