Q. Consider the following statements regarding Current Account of BoP:

1. The current account records exports and imports in only goods and not services.
2. Excess of current expenditures over current receipts is called Current Account deficit.

Which of the above is / are correct?
Answer: Only 2
Notes: The first statement is incorrect. Current Account is the record of trade in goods and services and transfer payments as well. Trade in goods includes exports and imports of goods. Trade in services includes factor income and non-factor income transactions. The second statement is correct as excess of current expenditures over current receipts is called Current Account deficit.