Current Account Definition in Balance of Payments

Steps:

• Recall that the balance of payments divides into current account, capital account, and financial account.
• Identify current account components: trade in goods and services, primary income (e.g., wages, investments), and secondary income (e.g., remittances, aid).
• Note that options simplify services into goods trade, focusing on net flows.
• Match the full current account as goods trade balance plus primary and secondary income nets.

Why C is correct:

• Per IMF standards, current account balance equals balance of goods + net primary income + net secondary income (transfers).

Why the others are wrong:

• A omits net transfers (secondary income), understating the account.
• B provides no valid components, failing to define the account.
• D adds capital balance, which belongs to the separate capital account.

Final answer: C