Balance of payments of a country includes

Correct option is D

The correct answer is (d) Both (1) and (2)
Explanation:
. Balance of Payments (BoP) records all economic transactions between residents of a country and the rest of the world.
. It includes the current account, which covers trade of goods and services.
. It also includes the capital/financial account, which records capital receipts and payments.
. Saving and investment are part of domestic national income accounting, not BoP.
. Thus, BoP includes both trade and capital flows.
Information Booster:
. Current Account includes visible trade, invisible trade, income, and unilateral transfers.
. Capital/Financial Account includes FDI, FPI, external borrowing, and banking capital.
Additional Knowledge:
Trade of goods and services (Option a)
. Forms a major part of the current account.
. Alone does not represent the complete BoP.
Capital receipts and payments (Option b)
. Recorded under capital/financial account.
. Essential but incomplete without current account.
Saving and investment (Option c)
. Part of national income and domestic accounts.
. Not directly included in Balance of Payments.