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.
1 only
2 and 3
1 and 3
1, 2 and 4
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC IAS – 2014
2. Foreign assets: These relate to investments and reserves, which are recorded in the Capital Account or Financial Account (often considered part of the Capital Account structure).
3. Balance of Invisibles: Exports minus imports of *services* and net income and net transfers. This is a component of the current account.
4. Special Drawing Rights (SDRs): These are reserve assets held by countries with the IMF and changes in SDR holdings are typically recorded in the Capital Account or as part of reserve assets, not current transactions.
Therefore, only 1 and 3 are components of the Current Account.