What does the balance of payments record?

The balance of payments is a comprehensive record that captures all economic transactions made between residents of a country and the rest of the world over a specific period. This includes not just the trade of goods and services—imports and exports—but also international investments, remittances, foreign aid, and other financial transactions.

By documenting these transactions, the balance of payments provides valuable insights into a country’s economic dealings with other nations. It helps in understanding how much money is flowing in and out of a country, which can influence economic policy, exchange rates, and trade agreements.

The other options focus on narrower aspects of the economy. Only recording exports and imports would fail to capture the entire economic picture. Government revenue and expenditure are detailed in national accounts but are not part of the balance of payments. Unemployment rates, while important economic indicators, pertain to labor markets rather than international financial transactions. Thus, the balance of payments offers a broader and more integrated view of a country’s economic interactions with the global economy.