Which of the following are components of Current Account in the balance of payments ?
A. Export of goods
B. Investments
C. Import of goods
D. Net factor income
E. Transfer payment
Choose the correct answer from options given below :
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : A, C, D and E only
B: Investments (such as Foreign Direct Investment or Portfolio Investment) are typically recorded under the Capital and Financial Account in the balance of payments framework.
Explanation :
- A. Export of goods falls under the Current Account as a positive component.
-C. Import of goods is part of the Current Account as a negative component.
- D. Net factor income represents earnings from abroad and is included in the Current Account.
-E. Transfer payments, such as foreign aid, are also components of the Current Account.
