With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?

1. Balance of trade

2. Foreign assets

3. Balance of Invisibles

4. Special Drawing Rights

Select the correct answer using the code given below.

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This question was previously asked in

UPSC Civil Services (Prelims) Exam GS Official Paper-I (Held On: 24 Aug 2014)

Answer 1

The correct answer is 1 and 3.

The balance of payment is a record of all monetary transactions made between the residents of one country and the rest of the world.
A balance of payments deficit means the nation imports are more than it exports.
The two components of the Balance of Payments are the current account and capital account.
The current account includes trade in goods and services (Invisibles) and transfer payments etc.
The capital account includes Foreign Direct Investment, Foreign Portfolio Investment, External Commercial Borrowings, SDR.
The capital account records all international purchases and sales of assets such as money, stocks, bonds, etc.