The current account includes:

Question

Quizplus · Accepted Answer

The current account reflects the international trade and financial transactions of a country with the rest of the world. It includes the balance of trade, which is the difference between the value of exports and imports of goods and services. It also includes net income of capital held abroad, which is the income earned by domestic residents from their investments in foreign countries minus the income earned by foreign residents from their investments in the domestic country. Additionally, the current account includes foreign aid, which is the transfer of resources from one country to another without the expectation of payment. Therefore, the best choice is D, which includes all three components.

The Current Account Includes