Final answer:
The balance of payment records a country's economic transactions with the world, including trade in goods and services, investment income, and unilateral transfers. The trade balance, which reflects the difference between exports and imports, is an integral part of the balance of payments.
Step-by-step explanation:
The balance of payment of a country records all economic transactions between the residents of that country and the rest of the world within a specific period. Investment income paid and received, the trade in goods and services, and unilateral transfers are all included in the balance of payments. Specifically, the current account balance shows the money received from exports of goods and services (the top line) and the payments sent abroad for imports (the fourth line). When talking about investment income, the focus is on the money flowing into and out of the country from investments.
The trade balance is a crucial component of the balance of payments, reflecting the difference between the value of a country's exports and its imports. While the export and import of goods are significant, the last two decades have shown an increase in international trade in services. Nevertheless, goods still make up the majority of global trade. The trade balance closely relates to international financial capital flows and is sometimes interchangeably referred to as the balance of payments.