Question

What is included in the current account balance?

Short answer

Current account balance is one of the three components of balance of payments. There are four major components included in current account balance.

Step-by-step solution

Step 1. Goods 

Imports and exports of goods only. These include objects physical in nature and are movable. It is basically transfer of ownership form domestic country of buyer of outside country.

Step 2. Services

Intangible actions such as transportation services, royalties and licensing. money that is received for a service is import and spent on a service is export. When imports exceed exports its trade deficit service and when exports exceeds it is trade surplus service.

Step 3. Income

Money that is coming in or out of country in form of salaries, portfolio investments or any type of investment. Income work as a fuel for function of the economy

Step 4. Unilateral transfers

transfers also known as current transfers These include workers' remittances , donations, aids and grants , pensions. It is when transfer of money is done from one country to other without receiving good and services of any kind in return.