The correct option for the current account.
Answer to Problem 1MCQ
Option b is correct.
Explanation of Solution
Explanation for the correct option:
b.
Current account on balance of payment includes the visible and invisible goods and services related transactions. It includes net transfers, factor income, etc. It includes exports and imports-related transactions. Therefore, option b is correct.
Explanation for incorrect options:
a.
The current account includes net transfers rather than gross international transfers. Therefore, option a is incorrect.
c.
Purchase and sales of assets are not included in the current account balance. Therefore, option c is an incorrect answer.
d.
Purchase and sales of an asset are not a part of the current account balance. Therefore, option d is incorrect.
e.
Similarly, sales of an asset to a foreigner are not a part of current activity, it is included in the capital account instead of the current account balance. Therefore, option e is incorrect.
Balance of payment: Balance of payment is the recording of transactions that occur with one country and the rest of the world over a financial period. It records the trading of goods and services and transfers payments.
Chapter 41 Solutions
Krugman's Economics For The Ap® Course
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