The component of balance of payments which shows how the balance of both current and capital accounts are settled is know as
Answer Details
The component of balance of payments which shows how the balance of both current and capital accounts are settled is known as the current account.
The current account is a record of a country's transactions with the rest of the world over a certain period of time, usually a year. It includes the value of goods and services exported, minus the value of goods and services imported, plus net income from abroad and net transfer payments.
In simple terms, the current account shows whether a country is earning more from its exports and other international transactions than it is spending on imports and other foreign payments. If a country is earning more than it is spending, it has a positive balance of payments or a trade surplus. On the other hand, if a country is spending more than it is earning, it has a negative balance of payments or a trade deficit.
The capital account, on the other hand, records the movement of financial assets, such as investments in foreign countries and loans made to foreign entities. It is the counterpart of the current account, as the sum of the current account and the capital account must equal zero.
The other options, such as monetary movement account and social-welfare account, are not standard terms used in economics or finance.