Distinguish and explain invisible trade, visible trade, current account, and capital account.

Here are the explanations for Q1:

Q1) Distinguish and explain the following:

a) Invisible trade
Invisible trade refers to the exchange of services between countries. These services are intangible and cannot be physically seen or touched, such as tourism, banking, insurance, shipping, and consulting.

b) Visible trade
Visible trade, also known as merchandise trade, involves the exchange of physical goods between countries. These goods are tangible and can be seen, touched, and weighed, such as cars, electronics, clothing, and agricultural products.

c) Current account
The current account is a component of a country's balance of payments that records all international transactions related to goods, services, investment income (e.g., interest, dividends), and current transfers (e.g., foreign aid, remittances). It primarily reflects a nation's net income from abroad.

d) Capital account
The capital account is another component of a country's balance of payments that records all international transactions involving the acquisition or disposal of non-financial assets (like land or patents) and capital transfers (e.g., debt forgiveness, inheritance taxes). It primarily reflects changes in foreign ownership of domestic assets and domestic ownership of foreign assets.