The correct answer is All of the above. Explanation & Key Takeaways: Trade • Trade means the voluntary exchange of goods and services. • It is conducted at two levels: International and National. International trade • It is the exchange of goods and services among countries across national boundaries. • International trade is based on differences in prices of goods and services from country to country. • International trade allows countries to expand their markets and access goods and services that otherwise may not have been available domestically. As a result of international trade, the market is more competitive. • Terms of trade are defined as the ratio between the index of export prices and the index of import prices. • If the export prices increase more than the import prices, a country has a positive term of trade, as for the same amount of exports, it can purchase more imports. • The balance of payments (BOP) is the method by which countries measure all of the international monetary transactions within a certain period. • The BOP consists of three main accounts: the current account, the capital account, and the financial account. • The current account is meant to balance against the sum of the financial and capital account but rarely does. • The Balance of Payments record in International Trade is maintained in a standard double-entry book-keeping method