What does the balance of payments record?

The balance of payments is a comprehensive financial statement that tracks all economic transactions made between residents of a country and the rest of the world over a specific period. This includes not only exports and imports of goods and services but also international financial transactions such as capital transfers, foreign investments, remittances, and income earned by residents from overseas investments.

By encompassing all these transactions, the balance of payments provides a complete picture of a country's economic interactions with other countries, highlighting how much money is coming into and going out of the country. This is crucial for understanding the overall economic health and stability of a nation, as well as its relationship with the global economy.

The other choices are limited in scope. Focusing solely on exports and imports, the trade balance, or just foreign investment data overlooks significant components of economic activity that the balance of payments is designed to capture.