The balance of payments is a systematic record of a country's economic transactions with the rest of the world over a specific period. It includes the current account $($trade balance, services, income, and current transfers$),$ the capital account $($capital transfers and non$-$financial asset transactions$),$ and the financial account $($transactions in financial assets like foreign direct investment and portfolio investment$).$ This accounting framework reflects a nation's economic health, trade relationships, and financial interactions on the global stage.

$1.$

Explain the components of the balance of payments and their impact on multinational business finance. $2.$ Explain the relationship between trade imbalances, employment, inflation, and exchange rates.