Components of capital account:
Current account reflects to all the current transaction.
- Merchandise or visible trade: Merchandise refers to the value of visible export and import. Exports are credits and imports are debits. The merchandise include both exports and imports on private and government account.
- Services invisible trade: IT include imports and exports of different kinds of services like travel, transport, banking, incurrence interest on loan, profit etc. These are services rendered by the various countries to one another.
- Transfer Payments: It include all types of donation, gives grants etc. It also include the pensions and other unilateral transfers for which nothing is given in return for them.