Current vs. Capital Account in Balance of Payments

Steps:

• Recall that the current account records trade in goods/services, income, and unilateral transfers.
• Identify transactions: A involves aid (transfer), B involves exports (goods), C involves foreign investment (capital flow), D involves dividend payments (income).
• Classify each: Current account covers A, B, D; capital account covers C.
• Confirm: Only C falls outside current account.

Why C is correct:

• Foreign direct investments are recorded in the capital/financial account, per balance of payments definitions, as they involve asset transfers, not current flows like trade or income.

Why the others are wrong:

• A: Aid is a unilateral current transfer.
• B: Exports are merchandise trade in the current account.
• D: Dividend payments are primary income outflows in the current account.

Final answer: C