How do we define Balance of Trade? Is this just based on 'good' (i.e tangible goods only) or does this include services? Q36 2011 S marking scheme suggest that its goods only. However some texts say we should include services. What is the correct way to go about such a question? Thanks in Advance
From Module 16... The Balance of trade is split into two categories in the current account: Balance of trade in goods: c = Exports of goods - imports of goods Balance of trade in services: f = Exports of services - imports of services Balance of trade in goods and services = c + f So from the above, I would say that you should include services!
Balance of trade should include both goods and services. In the exam question you are referring to, the examiners accepted both interpretations though.
