Consider the following statements about the Current Account Balance: 1. The Current Account Balance measures the flow of goods, services, income, and current transfers between a country and the rest of the world during a specific period. 2. The Current Account Balance forms a key component of a country’s Balance of Payments (BoP). 3. Foreign Direct Investment (FDI) inflows and external commercial borrowings are major components of the Current Account. Which of the statements given above is/are correct? |ForumIAS

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: A

Notes:

Explanation:

Statements 1 and 2 are correct: The Current Account covers trade in goods and services, income flows (like remittances, dividends, interest), and current transfers. It is indeed a key part of the BoP.
Statement 3 is incorrect: FDI inflows and external commercial borrowings are part of the Capital Account, not the Current Account

Source- TH