Question

Balance of trade equals

• A. Exports less imports
• B. Exports of goods less imports of goods
• C. Exports of services less imports of services
• D. None of these

Hint:

Balance of trade is strictly the goods (visible) component of the current account, separate from services.

Answer 1

The Correct Option is B

Step 1: Recall the BOP structure:
Current Account = Balance of Trade (goods) + Balance of Invisibles (services + income + transfers).

Step 2: Isolate what "trade" traditionally means in economics:
"Trade" historically and technically refers to merchandise/visible trade — the physical movement of goods across borders — as distinct from invisible items like services.

Step 3: Match the option:
Only the option that restricts itself to goods captures this precise, narrower definition; the services-only option describes invisibles instead.

Final Answer:
Option B.