Answer :
To answer this question correctly, let's first understand the components mentioned:
1. Net exports: This is the value of a country's total exports minus the value of its total imports. It reflects the balance of trade.
2. Foreign net income: This is the difference between income earned by the domestic residents from abroad and the income earned by foreign residents from the domestic economy.
3. Current transfers: These are unilateral transfers that do not have any quid pro quo. Examples include remittances sent by individuals, foreign aid, and gifts.
When we sum up net exports + foreign net income + current transfers, we are essentially calculating what is known in economics as the current account balance.
The current account is a component of a country's balance of payments and includes all transactions (excluding those in financial items) that involve the exchange of goods and services. It measures the flow of goods, services, income, and current transfers into and out of the country.
Given this understanding, the correct answer to the question is:
C. current account
This explains why option C is the right choice, encompassing the theoretical principles of economics involved in the current account's computation.
1. Net exports: This is the value of a country's total exports minus the value of its total imports. It reflects the balance of trade.
2. Foreign net income: This is the difference between income earned by the domestic residents from abroad and the income earned by foreign residents from the domestic economy.
3. Current transfers: These are unilateral transfers that do not have any quid pro quo. Examples include remittances sent by individuals, foreign aid, and gifts.
When we sum up net exports + foreign net income + current transfers, we are essentially calculating what is known in economics as the current account balance.
The current account is a component of a country's balance of payments and includes all transactions (excluding those in financial items) that involve the exchange of goods and services. It measures the flow of goods, services, income, and current transfers into and out of the country.
Given this understanding, the correct answer to the question is:
C. current account
This explains why option C is the right choice, encompassing the theoretical principles of economics involved in the current account's computation.
