The correct answer is: B. Balance of trade plus net invisible exports.
The balance of payments is a statement of all the economic transactions between a country and the rest of the world. It is divided into two main accounts: the current account and the capital account. The current account records all the flows of goods, services, income, and current transfers between a country and the rest of the world. The capital account records all the flows of financial assets between a country and the rest of the world.
The balance of trade is the difference between the value of a country’s exports and the value of its imports. If a country exports more goods and services than it imports, it has a trade surplus. If a country imports more goods and services than it exports, it has a trade deficit.
Net invisible exports are the value of a country’s exports of services minus the value of its imports of services. Services include things like tourism, banking, and insurance.
The balance of payments on current account is the sum of the balance of trade and net invisible exports. It is a measure of a country’s net income from its international transactions. If a country has a current account surplus, it is earning more from its international transactions than it is spending. If a country has a current account deficit, it is spending more on its international transactions than it is earning.
Option A is incorrect because it includes short-term capital flows. Short-term capital flows are not included in the current account.
Option C is incorrect because it subtracts capital flows from the balance of payments. Capital flows are included in the capital account, not the current account.
Option D is incorrect because it includes the balance of invisible trade plus imports. The balance of invisible trade is included in the current account, but imports are not.