Workers from Country X who work abroad and send money home to their families are making
Question 1 Report
Workers from Country X who work abroad and send money home to their families are making
Answer Details
The correct answer is worker remittances, which are recorded on the current account.
Worker remittances are transfers of money sent by workers living abroad back to their families in their home country. These are classified as secondary income (current transfers) on the current account of the balance of payments.
Remittances are an important source of foreign currency for many developing countries and can significantly improve the current account balance. They represent a credit (inflow) on the receiving country's current account.
Portfolio investments involve buying financial assets (shares, bonds) in foreign markets and are recorded on the financial account. Foreign direct investment (FDI) involves establishing or acquiring business operations abroad, also on the financial account. Capital transfers on the capital account cover items like debt forgiveness and migrant transfers of assets, which are different from regular wage remittances.
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