question_answer

List the transactions of Current Account of the Balance of Payments Account.

Answer:

The following are the three main transactions of the Current Account of BOP.

(i) Export and Import of Goods: The transaction related to the export and import of goods are recorded in the Current Account of BOP. This record of exports and imports is also termed as 'Balance of Visible Traded?. The export of goods is recorded as positive items whereas, the import of goods are recorded as negative items in the Current Account of BOP.

(ii) Export and import of services: The second component of the Current Account is the export and import of services. The record of export and import of services is also termed the 'Balance of Invisible Trade\ Similar to the export of goods, export of services is recorded as positive items in the Current Account of BOP. Some of the major services that are included in the Current Account are shipping services, insurance and banking services, income from investment (i.e., income from profits and dividends), foreign travel, miscellaneous transactions such as royalties, consultancy services, telephone services, etc.

(iii) Unilateral transfer: Unilateral transfers refer to the one-sided transfer such as gifts, donations, grants from foreign governments, etc. A country makes such transfers to the rest of the world as well as receives transfers from the rest of the world. The receipts of unilateral transfers are recorded as positive items in the Current Account, whereas, the payments of unilateral transfers are recorded as negative items in the Current Account of BOP.