Components of the Balance of Payments
Balance of Payments
AO2
Syllabus requirement
Explains the current, capital, and financial accounts, including trade in goods/services, income, transfers, FDI, portfolio flows, and reserve assets.
Assessment objectives
AO2 Application and Analysis
Summary
This topic describes the components of the balance of payments, focusing on the current account and its four parts: balance of trade in goods, balance of trade in services, income, and current transfers. It explains what each component records, how the current account balance is calculated, and why the current account is often the most cited part of a country's international accounts.