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Economics explained


Balance of payments

The current account

The current account

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The current account balance is the overall balance of the trade in goods, trade in services, income and current transfers.

Current account transactions are subdivided into four parts:

Trade in goods:

The visible trade balance is a record of the export and import of physical goods. It is also known as the balance of trade in goods.

raw materials
semi-manufactured products
manufactured goods.

Trade in services:

The invisible trade balance is a record of the export and import of services (intangible products).



Income is divided into two parts:
Income from employment of residents by overseas firms
Income from capital investment overseas

Current transfers:

money spent on foreign aid
money sent home by people working abroad
taxes received by the government from foreign residents and firms
bank deposits held in overseas banks.

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