Current Account Excludes Capital Flows

Steps:

• Define current account: includes trade in goods/services, primary income (e.g., profits), and transfers.
• Classify A: exports of primary commodities count as goods trade.
• Classify B and D: banking services and overseas profits are service income and primary income, respectively.
• Classify C: overseas investment involves capital transfers, not current flows.

Why C is correct:

• Overseas investment records capital account transactions for asset purchases abroad, per IMF balance of payments manual.

Why the others are wrong:

• A: Represents merchandise exports in the goods balance of the current account.
• B: Counts as invisible exports in the services component of the current account.
• D: Forms part of net primary income from foreign investments in the current account.

Final answer: C