Explanation

A. Domestic trade is also known as home trade. It is refers to the exchange of goods or services within a country or teritorry. In this
type of trade scenerio, the market is constrianed by the borders of that country.
External trade is also known as foreign trade. It refers to the buying and selling og goods across national boundries of different
countries. On the basis of sales and purchases of goods and services.

B. Terms of trade is 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 terms of trade, as for the same amount of export, it can purchase more imports.
Balance of trade is the difference between the value of a country's exports and the value of a country's imports for a given period.

C. - Rapid economic development: High outflow of foreign exchange to meet import demands like technology, machines and
equipment can lead to balance of payment deficit.
- Inflation: Sustained rise in a country's prices can often make foreign products cheaper, leading to a high volume of imports.
- Political disturbance: Unstable tax structures, change in government, etc can lead to a loss in foreign investment, and give way
for balance of payment deficit.
- Demonstration effect: Most of the developing countries get influenced by developed nations and start adopting the foreign
pattern of consumption. In other words, this results in a sharp rise in imports leading to a deficit in the balance of payment.

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