Current Account vs. Capital Account in Balance of Payments

Steps:

• Define current account: includes trade in goods/services, primary income (wages, investment income), and secondary income (transfers).
• Classify A: exports of services fit under services trade.
• Classify B and C: interest and profits are primary income from abroad.
• Classify D: asset purchases involve capital flows, not income or trade.

Why D is correct:

• The purchase of foreign assets represents a capital outflow in the financial account, per IMF balance of payments manual, not current account transactions.

Why the others are wrong:

• A: Exports of services directly contribute to the services component of the current account.
• B: Interest on foreign loans counts as primary income received in the current account.
• C: Profits from foreign investments are repatriated income in the current account's primary income section.

Final answer: D