What are the major components of the current account in the balance of payments? How is the current account balance determined?

What will be an ideal response?

The current account shows the position of the United States in terms of trade in goods and services. Two major components of this account are U.S. goods exports and imports. The difference between these two components gives the balance on goods. Two other components are U.S. exports and imports of services. The difference between these two components gives the balance on services, which is added to the balance on goods to give the balance on goods and services. The fifth component is net investment income. It shows excess of interest and dividend payments foreigners paid to U.S. individuals or companies for the services of U.S. exported capital over what the U.S. paid to foreign individuals or companies. The sixth item is net transfer payments. This is the difference between U.S. public and private transfer payments to the rest of the world and foreign private and public transfer payments to the United States. Adding net investment income and net transfer payments to the balance on goods and services gives the balance on the current account.