Question

briefly describe what the current account transactions encompass

Answer 1

A current account is involved in the short term transactions of a country. It simply implies that the account shows the differences between a country’s investment and savings. Current account transactions also involve the debit and credits retrieved from foreign exchange transactions. All the exchanges that take place in these transactions are recorded in this account.

Answer 2

In Macroeconomics or International Economics,the current account is a component of Balance of Payments(BOP) in an open economic system.

Explanation:

• Current account is a component or part of the BOP of any country which estimates the summation of its trade balance, overall or total net income and the overall direct or unilateral payments.
• The trade balance under the current account comprises of a country's overall or total export,impost level of goods and services in the international market and any international transfer payments.
• The net income payments under the current account is calculated as the difference between the overall or total income or earnings by the domestic citizens or investors on foreign assets and the any income or payments from the domestic country to the foreign citizens or investors.
• The unilateral or direct transfer payments basically comprise of the unconditional unilateral payments made by one country to the other.The unilateral transfers basically includes charitable or philanthropic donations, financial or material aids or financial assistance provided by one country to the other during emergency situations such as war, natural calamities, medical lockdowns and so forth.These transfer payments do not involve any currency exchange and the recipient country is usually not obligated to pay back anything to the donor country in return for these payments.