Final answer:
The current account in the balance-of-payments includes transactions for goods and services, whereas the financial account records direct investment and capital movements. The current account involves a flow of payments corresponding to these international transactions, closely related to the balance of trade.
Step-by-step explanation:
The student's question relates to the current account of the balance-of-payments record, which is an important component of international economics. The current account is actually a record of transactions that include goods, services, primary income, and secondary income.
These transactions are comprised of exports and imports of goods and services, where the home country receives payment for exports and makes payments for imports. Moreover, it records investment income paid and received, such as dividends and interest.
However, direct investment, portfolio investment, and short-term capital movements are actually part of the financial account, which is distinct from the current account. The financial account reflects investment flows and is concerned with the ownership of assets, whereas the current account deals with transactions that affect a country's net income, such as transactions for goods and services.
Each element of the current account balance involves a corresponding flow of payments between the home country and the rest of the world. Economic literature sometimes describes the balance of trade in conjunction with the balance of payments due to the close relationship between trade balances and international flows of financial capital.
The complete question is: In a balance-of-payments record, the current account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. is: