Question

Which account of Balance of Payments records export and import of goods?

• A. Capital Account
• B. Current Account
• C. Official Reserve Account
• D. Monetary Account

Hint:

Think of the Current Account as a record of "actual trade and income," while the Capital Account is a record of "who owns what" and financial claims.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
The Balance of Payments (BOP) is a systematic record of all economic transactions between the residents of a country and the rest of the world. It is divided into the Current Account and the Capital Account.

Step 2: Detailed Explanation:

• Current Account: Records trade in goods (visible trade), trade in services (invisible trade), and unilateral transfers (gifts/remittances).
• Capital Account: Records transactions that cause a change in the assets or liabilities of a country (e.g., FDI, loans, and investments).

Step 3: Final Answer:
Export and import of goods are recorded in the Current Account.