Question : Which of the following is not a component of the current account in the balance of payments?
Option 1: Exports of goods and services
Option 2: Imports of goods and services
Option 3: Income from abroad
Option 4: Capital flows
Correct Answer: Capital flows
Solution : The correct answer is (d) Capital flows
Capital flows are not a component of the current account in the balance of payments. The current account includes exports and imports of goods and services, income from abroad (such as earnings from foreign investments or remittances), and unilateral transfers (such as foreign aid or gifts). Capital flows, on the other hand, are recorded in the capital account of the balance of payments and represent financial transactions involving the acquisition or disposal of assets between residents and non-residents.
