Question

Tourism, banking, insurance, transportation, and software services are examples of which component of the current account?

Options

• Factor Income (Factor Invisibles)

• Unilateral Transfers

• Goods (Visible Items)

• Services (Non-factor Invisibles)

Answer 1

Tourism, banking, insurance, transportation, and software services constitute trade in services, termed Non-factor Invisibles. They are 'invisible' because they are intangible, and 'non-factor' because they are not returns to factors of production like labour or capital.