ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Exports are recorded as credits in the balance of payments, while imports are recorded as debits. A positive current account balance indicates that the nation is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower.

Detailed explanation-2: -The current account is an important indicator of an economy’s speed. It is defined as the sum of the balance of trade (goods and services exports minus imports), net income from abroad, and net current transfers.

Detailed explanation-3: -The Four Current Account Components. The current account can be divided into four components: trade, net income, direct transfers of capital, and asset income.

Detailed explanation-4: -The current account balance of payments is a record of a country’s international transactions with the rest of the world. The current account includes all the transactions (other than those in financial items) that involve economic values and occur between resident and non-resident entities.

Detailed explanation-5: -The current account defined as the sum of net exports of goods and services and unrequited transfers balances can be derived via the national income accounts, as well.