Question : Which of the following is not a component of the current account in the balance of payments?
Option 1: Goods and services
Option 2: Income from abroad
Option 3: Capital flows
Option 4: financial account
Answer (1)
25th Jan, 2024
Correct Answer: Capital flows
Solution : The correct answer is (c) Capital flows
The current account in the balance of payments includes the components of goods and services, income from abroad, and current transfers. Capital flows, on the other hand, are recorded in the financial account of the balance of payments. Capital flows capture the movement of financial assets between countries, such as foreign direct investment, portfolio investment, and loans.
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