What is included in the current account besides goods?

• A. Services, income from abroad, and transfers
• B. Direct investment
• C. Central bank reserves
• D. Government grants

Answer: (A)

In balance of payments terms, the current account records flows that reflect trade in goods and services plus two other types of ongoing payments between residents and the rest of the world. Besides goods, the current account includes services (such as tourism, transport, and professional services), income from abroad (interest, dividends, and earnings of residents working overseas), and current transfers (remittances, foreign aid, and other unilateral transfers). Direct investment and other financial movements are part of the financial account, and central bank reserves are also recorded in the financial side, not the current account. So the elements that accompany goods in the current account are services, income from abroad, and transfers.