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Question

What are the types of balance of payment?


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Solution

The three types of balance of payments:

  • Current account: In this account, all the incoming and outgoing goods and services between countries are recorded. Under this account transactions related to the primary sector like payments made for raw materials and constructed goods are recorded.
  • Capital account: in this account, transactions related to the secondary sectors like the purchase and sale of assets like lands and properties are recorded.
  • Finance account: under this account, the transactions of fund flows from one country to another are recorded like a foreign direct investment.

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