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Open Economy Macroeconomics
Question
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Explain the components of (i) Current Account and (ii) Capital Account.

Answer

(i) Components of current account are (a) Export and import of goods, (b) Export and import of services, and (c) Unilateral transfers.
(ii) Various forms or components of capital account are (a) Private transactions, (b) Official transactions, (c) Direct investment, and (d) Portfolio investment.

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