The current account comprises trade in goods, trade in services, primary income and secondary income
The current account records four types of money flows between a country and the rest of the world. These are: physical goods traded, services sold or bought, investment income earned abroad, and transfers such as foreign aid.
Formula
Current Account Balance = (X − M) goods + (X − M) services + Primary Income + Secondary Income
Real World
The UK has a persistent goods trade deficit (importing more cars and electronics than it exports) but a services surplus, as London's financial and legal sectors export services globally.
Exam Focus
Name all four components explicitly when asked to 'outline' the current account — missing secondary income is a common error that loses marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
How well did you know this?