The correct answer is: A. Balance of current account + Balance of capital account + Statistical discrepancy
The balance of payments is a statement of all economic transactions between a country and the rest of the world during a specific period of time, usually a year. It is divided into two main accounts: the current account and the capital account.
The current account records all transactions that involve the exchange of goods and services, as well as income and current transfers. Goods and services are recorded as exports and imports. Income is recorded as payments received from abroad for factors of production, such as labor and capital, and payments made to foreigners for the use of their factors of production. Current transfers are unilateral payments, such as gifts and remittances.
The capital account records all transactions that involve the exchange of financial assets, such as stocks, bonds, and real estate. These transactions can be either direct investment, which involves the acquisition of a lasting interest in an enterprise in another country, or portfolio investment, which involves the purchase of financial assets without any lasting interest in the enterprise.
The statistical discrepancy is a balancing item that is used to account for any errors or omissions in the balance of payments.
The overall balance of payments is the sum of the current account balance and the capital account balance. It is a measure of a country’s net international investment position. A positive overall balance of payments indicates that a country is a net creditor, while a negative overall balance of payments indicates that a country is a net debtor.
Option B is incorrect because it only includes the current account balance. Option C is incorrect because it only includes the capital account balance. Option D is incorrect because it includes both the current account balance and the capital account balance, but it does not include the statistical discrepancy.