Question : The current account includes the balance of trade in goods, balance of trade in _______________and ____________transactions.
Option 1: services, capital
Option 2: transfers, income
Option 3: imports, exports
Option 4: investments, remittances
Correct Answer: services, capital
Solution : The correct answer is (a) services, capital
The current account includes the balance of trade in goods, the balance of trade in services, and transactions related to income and transfers. Specifically, the balance of trade in goods represents the difference between a country's exports and imports of tangible goods. The balance of trade in services reflects the difference between a country's exports and imports of intangible services, such as tourism, transportation, and financial services. Transactions related to income include earnings from investments and remittances, while transfers include unilateral transfers of funds, such as foreign aid or personal remittances.
