Question

Which items are included in balance of trade?

Hint:

Balance of Trade is simple: it only counts physical things you can see and touch (visible goods) that are exported and imported.

Answer 1

The Balance of Trade (BoT) only includes the value of a country's exports and imports of visible goods (or merchandise). It does not include trade in services, income, or financial assets. The BoT is calculated as: \[ \text{Balance of Trade} = \text{Value of Exports of Goods} - \text{Value of Imports of Goods} \] It is the largest component of the current account in the Balance of Payments.