UPSC CSE Prelims
Question 98
With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?
- Balance of trade
- Foreign assets
- Balance of invisibles
- Special Drawing Rights
Select the correct answer using the code given below.
View correct answer and explanation
Correct answer: C
Correct Option: C
Explanation: The current account includes trade in goods and the net balance of services, income and transfers (invisibles); foreign asset transactions and SDR allocations belong elsewhere.
Statement/Pair-wise Analysis:
Statement/Item 1: Correct - Exports and imports of goods form the balance of trade on the current account.
Statement/Item 2: Incorrect - Acquisitions or sales of foreign financial assets appear in the financial account, not current account.
Statement/Item 3: Correct - Net services, primary income and secondary income are the traditional balance of invisibles.
Statement/Item 4: Incorrect - SDR allocations/reserve-asset transactions are not components of current-account receipts.
Option-wise Analysis:
A: Incorrect - omits correct statement/item 3.
B: Incorrect - includes incorrect statement/item 2; omits correct statement/item 1.
C: Correct - includes all and only the correct items.
D: Incorrect - includes incorrect statement/items 2, 4; omits correct statement/item 3.