Understanding Balance of Payments Components

Very Easy International Economics Balance Of Payments

In international economics, the Balance of Payments (BoP) is a systematic record of all economic transactions between residents of one country and the rest of the world over a specific time period. The BoP consists of two main accounts: the current account, which includes trade in goods and services, and the capital account, which records the flow of capital.

Which of the following statements correctly describes a component of the Balance of Payments?

The current account includes only the trade of goods.

The capital account records financial transactions like investments.

The balance of payments is only concerned with government transactions.

Hint

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