Which components are included in the balance of payments?

The balance of payments is a comprehensive record of a country's economic transactions with the rest of the world and is generally divided into three main components: the current account, the capital account, and the financial account.

The current account primarily includes transactions involving trade in goods and services, income from investments, and transfer payments. This account measures the flow of goods and services into and out of a country and captures how the country is performing economically concerning the rest of the world.

The capital account records the value of all transactions involving the purchase and sale of assets—essentially, it tracks the financial transactions that do not affect the income flow. This includes things like debt forgiveness and the transfer of assets.

The financial account, on the other hand, focuses on the flow of investments in and out of the country. This account measures the change in ownership of both foreign and domestic assets, including foreign direct investment and portfolio investment.

This correct combination highlights the major frameworks within which international economic activities are analyzed and understood. Other choices include accounts that do not exist or are not part of the standard balance of payments structure, emphasizing the accuracy of the components listed in the correct answer.