Secondary income balance shows improvement

Steps:

• Compare year 1 and year 2 values for each component to determine change.
• Improvement means a higher surplus or lower deficit from year 1 to year 2.
• Review balance of goods: no improvement observed.
• Review balance of secondary income: value improved (e.g., deficit reduced).

Why C is correct:

• Secondary income (transfers like remittances) balance rose from year 1 to year 2, per IMF balance of payments manual, signaling net inflow gains.

Why the others are wrong:

• A. Goods balance worsened (larger deficit in year 2).
• B. Primary income balance declined (smaller surplus in year 2).
• D. Services balance deteriorated (deeper deficit in year 2).

Final answer: C