Remittances as secondary income in balance of payments

Steps:

• Identify the transaction: Filipino workers in Europe remit earnings to relatives in the Philippines.
• Classify the flow: These are unilateral transfers of money without quid pro quo.
• Locate in current account: Current account divides into trade balance, primary income (earned income), and secondary income (transfers).
• Assign category: Remittances fit secondary income as personal transfers from abroad.

Why B is correct:

• Secondary income includes current transfers like workers' remittances, per IMF Balance of Payments Manual, recording inflows to the recipient country (Philippines).

Why the others are wrong:

• A: Primary income covers compensation of employees (wages earned abroad) and investment income, not unearned transfers to relatives.
• C: Trade in goods records exports/imports of physical merchandise, not financial remittances.
• D: Trade in services involves exported/imported intangible services like consulting, not money transfers.

Final answer: B