You work part-time as an economics tutor for your university. A student comes to you confused about the trade balance and financial flows. Since we pay money in trade, why isn't it considered a financial flow? How would you explain the difference between trade balance and financial flows?
a. Trade balance measures the value of imports and exports, while financial flows refer to the movement of money for investment and lending.
b. Trade balance and financial flows are used interchangeably in economics.
c. Trade balance only includes goods, while financial flows include both goods and services.
d. Financial flows measure the balance of payments, while trade balance refers to the movement of currencies.