With reference to Balance of Payments which of the following constitute s Current Account 1 nbs...........

Economic Affairs Balance of Payments

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With reference to Balance of Payments, which of the following constitute(s) Current Account?

1. Balance of trade

2. Foreign assets

3. Balance of invisibles

4. Special Drawing Rights

Select the correct answer using the code given below.

1 only

2 and 3

1 and 3

1, 2 and 4

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Explanation:

The current account on the balance of payments measures the inflow and outflow of goods, services and investment incomes.
The main components of the current account are:
1. Trade in goods (visible balance)
2. Trade in services (invisible balance) e.g. insurance and services
3. Investment incomes e.g. dividends, interest and migrants remittances from abroad
4. Net transfers – e.g. International aid
A deficit on the current account means that the value of imports is greater than the value of exports.
A surplus on the current account means that the value of imports is less than the value of exports.