India’s trade in goods is +2.0% of GDP, trade in services is –0.8% of GDP, net income balance is +1.5% of GDP and net transfer balance is +0.3% of GDP. What is the current account balance as a percentage of GDP?
Answer
3.0% of GDP
The correct answer is 3.0% of GDP — Hence the current account is of GDP.
Step-by-step solution
- Add the trade in goods and trade in services:
- Add the net income balance:
- Add the net transfer balance:
- Hence the current account is of GDP.
Common mistake: Forgetting the sign of the net transfer balance
Concept tested: Current account calculation
Published · How this solution was prepared and checked
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