Current account of the balance of payments

Learning objectives

Describe the four components of the current account: trade in goods, trade in services, primary income and secondary income

Calculate a deficit or a surplus on each component and on the current account as a whole

Explain the reasons for a current account deficit and for a current account surplus

Analyse how a current account deficit or surplus affects GDP, employment, inflation and the exchange rate

Discuss the policies a government can use to achieve balance of payments stability and how effective each is likely to be