Discussion
Balance of trade takes into account :
Answer: D
Balance of trade takes into account export and import of only merchandise goods.
The balance of trade is the difference between the value of a country's exports and imports of visible items, that is, physical goods (merchandise). India, for instance, runs a large trade deficit because its merchandise imports, led by oil and gold, exceed its merchandise exports.
Services such as software, tourism and transport are invisible items. Together with merchandise trade, transfers and income they make up the current account of the balance of payments, which is a wider measure than the balance of trade. Movements of capital are recorded in the capital account. So the options that bring in services alone, goods and services, or capital describe other parts of the balance of payments.
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