Balance of trade and balance of payment. - SS1 Commerce Past Questions and Answers - page 1

Trade in goods between countries

Current account

Exports exceed imports

Income flows and financial transfers

A trade deficit in the balance of trade occurs when a country's imports exceed its exports, indicating that it is buying more goods from other countries than it is selling to them.

One component of the balance of payments is the financial account, which tracks changes in ownership of financial assets and liabilities, including foreign direct investment, portfolio investment, and changes in reserve assets held by the central bank.