Which of the following comprises the current account of the balance of payments? A. Invisible exports…
Invisible transactions such as services/income and current unilateral transfers belong to the current account. FDI, foreign borrowing and SDR allocations are…
Choose your answer
Which of the following comprises the current account of the balance of payments?
A. Invisible exports and imports
B. Direct investment
C. Unilateral transfers
D. SDR allocations
E. Borrowings from foreign countries
Answer and explanation
Correct answer C
Invisible transactions such as services/income and current unilateral transfers belong to the current account. FDI, foreign borrowing and SDR allocations are financial/reserve transactions. Thus A, C. Capital transfers are a distinct category, so the traditional unilateral-transfer wording here is interpreted as current transfers.
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UGC NET Economics