A balance of payment includes which components?

The answer is that a balance of payments includes current and capital accounts because it provides a comprehensive overview of a country's economic transactions with the rest of the world over a specific period.

The current account records all transactions that involve the exchange of goods and services, income from investments, and transfers. This includes things like exports and imports, as well as earnings from foreign investments and remittances.

The capital account, on the other hand, captures transactions related to the acquisition and disposal of non-financial assets and transfers of capital. It includes movements of capital, such as investment in physical assets or debt forgiveness, which ultimately affect the flows of capital into and out of the country.

Together, these accounts help to illustrate how a country is participating in international trade and investment, and are crucial for understanding its financial health and economic standing in the global arena. Other choices that suggest only focusing on one type of account do not reflect the complete picture that the balance of payments offers.