Asked by SumayaEconomics 📈

What are the 4 components of the current account?

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Husain Mukadam

Make Learning Fun Again! MSc | BSc | 4yrs+ exp. | DBS Certified✔️

1.     Goods - These are movable and physical in nature, and for a transaction to be recorded under "goods," a change of ownership from/to a resident (of the local country) to/from a non-resident (in a foreign country) has to take place. Movable goods include general merchandise, goods used for processing other goods, and non-monetary gold. An export is marked as a credit (money coming in), and an import is noted as a debit (money going out). 2.     Services - These transactions result from an intangible action such as transportation, business services, tourism, royalties or licensing. If money is being paid for a service, it is recorded like an import (a debit), and if money is received, it is recorded like an export (credit). 3.     Income - Income is money going in (credit) or out (debit) of a country from salaries, portfolio investments (in the form of dividends, for example), direct investments or any other type of investment. Together, goods, services, and income provide an economy with fuel to function. This means that items under these categories are actual resources that are transferred to and from a country for economic production. 4.     Current Transfers - Current transfers are unilateral transfers with nothing received in return. These include workers' remittances, donations, aids and grants, official assistance and pensions. Due to their nature, current transfers are not considered real resources that affect economic production. Hope that helps! ☺️

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