CBSE 2025, Compartment, Set 1

Question

Explain any two components of Current Account under Balance of Payments.

Edvaya · Accepted Answer

The correct answer is Subjective. The Current Account under the Balance of Payments systematically records all transactions relating to the export and import of goods and services and unilateral transfers during a given period. Two major components are: 1. **Trade in Goods (Visible Trade):** This includes the physical export and import of tangible goods. Receipts from the export of goods are recorded on the credit (positive) side, as they bring in foreign exchange, while payments for the import of goods are recorded on the debit (negative) side. 2. **Trade in Services (Invisible Trade):** This includes the export and import of intangible services, which can be factor services (like investment income) or non-factor services (like shipping, banking, insurance, and software services). Service exports are recorded on the credit side, and service imports are recorded on the debit side.

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Economics > Introductory Macroeconomics > Balance Of Payments

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