Describe the components of the current account of the Balance of Payments
Block Type
Knowledge Checkpoint
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Knowledge Checkpoint: Describe the components of the current account of the Balance of Payments (3 marks).
You must describe at least 2 components to gain full marks.
1 mark for each valid description.
1 mark for each valid development.
A model answer could look something like this:
The current account includes trade in goods, which is the value of exports minus the value of imports of physical items like cars, clothes, or food (1). This component of the current account has been in a deficit in the UK for a long time (1).
Another component is trade in services, covering intangible transactions such as tourism, transportations, or business services (1).