The current account includes?

The current account includes?

• A. Visible trade in goods and invisible trade (services, income, transfers)
• B. Financial investments
• C. Capital transfers
• D. Government budget balance

Answer: (A)

The current account records the flow of value with the rest of the world for goods, services, income, and current transfers. It includes visible trade in goods and invisible trade, which covers services as well as income earned from abroad and unilateral transfers such as remittances. It does not cover financial investments (that’s the financial account), capital transfers (which go in the capital account), or the government budget balance (a fiscal measure). So describing it as the part that includes goods and services plus income and transfers best captures what the current account tracks.

The current account records the flow of value with the rest of the world for goods, services, income, and current transfers. It includes visible trade in goods and invisible trade, which covers services as well as income earned from abroad and unilateral transfers such as remittances. It does not cover financial investments (that’s the financial account), capital transfers (which go in the capital account), or the government budget balance (a fiscal measure). So describing it as the part that includes goods and services plus income and transfers best captures what the current account tracks.