Which components are included as primary income in the current account of the balance ofpayments?tradein goodscurrenttransfersemploymentincome fromabroadA keyB = includedC = not includedD
Question
Which components are included as primary income in the current account of the balance ofpayments?tradein goodscurrenttransfersemploymentincome fromabroadA keyB = includedC = not includedD
Solution
The primary income in the current account of the balance of payments includes:
- Trade in goods: Not included (D)
- Current transfers: Not included (D)
- Employment income from abroad: Included (B)
Please note that primary income refers to income from factors of production (i.e., labor and capital) that cross international borders. This includes compensation of employees (wages, salaries, and other benefits earned by residents working abroad and non-residents working domestically) and income from investment (interest, dividends, etc.). Trade in goods and current transfers, on the other hand, are part of the broader current account but are not considered primary income.
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