The current account in a nation's balance of payments includes

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Which of the following are included in a nation’s balance of payments accounts?I. International tradingII. International lendingIII. Domestic investmentI only.I and II only.I and III only.II and III only.

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Answer: Option (B) is correct.

Explanation:

The balance of payments includes three accounts current account, capital account and financial account.

It includes all the transactions that takes place between a home and foreign country in which payments made to foreign country & receipts from the foreign country are present.

The current account includes the export and import of goods and services. The large volume of trade between the countries represents the trade openness. Therefore, this includes the international trading.

The financial account includes all the changes that are occurred in a international assets of a country. Therefore, this includes the international lending.

The capital account includes the capital expenditures and overall income of a nation.

Therefore, statement I and II are correct.


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