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 all economic transactions between a country and the rest of the world. This includes:

• Visible trade (goods)
• Invisible trade (services like tourism, banking, insurance, etc.)
• Capital transfers (foreign investments, loans, aid)
• Official reserves (changes in foreign currency holdings)

Thus, while the balance of trade focuses solely on goods, the balance of payments encompasses all financial transactions of a country.