Question : Which of the following is not a component of the current account?
Option 1: Balance of trade in goods and services
Option 2: Net income from abroad
Option 3: Net transfer payments
Option 4: Net capital inflows
Answer (1)
13th Jan, 2024
Correct Answer: Net capital inflows
Solution : The correct answer is d) Net capital inflows
Net capital inflows are not a component of the current account. Net capital inflows refer to the difference between the inflow and outflow of financial capital, such as foreign investment in a country or loans received from abroad. This is a component of the capital account of the Balance of Payments (BoP), which tracks the financial transactions between residents and non-residents.
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