Question

The current account is the record of transactions in the following two categories (select two):

A) merchandise
B) services
C) direct investment
D) capital inflows

Answer 1

The current account is the record of transactions in merchandise and services.

Step-by-step explanation:

The current account is the record of transactions in two categories:

1. Merchandise: This includes the exports and imports of tangible goods like cars, clothing, and electronics.
2. Services: This includes transactions related to intangible services like tourism, banking, and consulting.

Direct investment and capital inflows are not part of the current account. Direct investment refers to investments made by companies to establish a significant influence in foreign businesses, while capital inflows refer to the flow of money into a country as investments.