The balance of payments (BOP) measures the economic transactions of a country with the rest of the world. It includes trade in goods and services, income flows, and financial capital movements. The BOP has current and financial accounts. The current account covers trade and income flows. The financial account covers capital transactions such as foreign direct investment. A BOP surplus or deficit impacts a country's exchange rate and macroeconomic variables like GDP, interest rates, and inflation. Government policies affect how a country manages its BOP.