Question

Which of the following statements about the current account and the capital account is correct?

a. The value of goods or services exported equals the value of the asset given up to pay for them.
b. The current account measures financial investments, while the capital account measures trade in goods and services.
c. The current account measures trade in goods and services, while the capital account measures financial investments.
d. The current account measures the balance of payments, while the capital account measures the balance of trade

Answer 1

The correct statement about the current account and the capital account is that the current account measures trade in goods and services, while the capital account measures financial investments.

Step-by-step explanation:

The correct statement about the current account and the capital account is: c. The current account measures trade in goods and services, while the capital account measures financial investments. The current account is a broad measure of the balance of trade, which includes trade in goods and services, as well as international flows of income and foreign aid. It reflects the value of goods and services exported and imported by a country. On the other hand, the capital account measures financial investments, such as direct investment, portfolio investment, and other types of capital flows. It records the inflow and outflow of funds for investments between countries.