What is balance of payments? Explain its major components. Why is it useful to compute a country’s balance of payments?

THIS ANSWER ABOVE 550 WORDS – The Balance of Payments (BOP), also called the Balance of International Payments, BPI, or BOP by the acronym in English of Balance of Payments (BOP), is the statistical-accounting record of the economic transactions that a country has with the rest of the world in a For a given period of time, these transactions are of two kinds, real (those that refer to the trade of goods or services) and financial (those that refer to capital flows).

 

Definition
The balance of payments (BOP) is a statistical state of a given period that indicates:

a) the transactions of goods, services and income between an economy and the rest of the world;

b) transfers of property and other variations of monetary gold, special drawing rights (SDRs) and the assets and liabilities of the economy with respect to the rest of the world; and

c) the unilateral transfers and counterpart entries necessary to balance, from the accounting point of view, the transactions and variations entries just listed that do not compensate each other.