QUESTION 2 The current account is the record of O a foreign

QUESTION 2 The current account is the record of O a. foreign investment in the nation. Ob. payments for imports, receipts for exports, net interest, and net transfers. c. the nation\'s exports but not its imports d. changes in the government\'s holdings of foreign currency.

Solution

Correct option is (b).

In the Balance of Payments accounts, Current account comprises the cash inflows from exports, cash outflows for imports, net interest (= Interest income from abroad - Interest payment abroad) and net transfers (= Transfer payments received from abroad - Transfer payments made abroad).