Discuss the current account and its components and the capital and financial accounts and their components. How important is the U.S. deficit in traded goods in regard to the balance of payments?

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The current account is one of the three components of a nation’s balance of payments and it includes all transactions related to trade in goods, services, income and transfers. These accounts measure the financial flow between nations. These include direct foreign investments, portfolios and other long-term investment such as loans or debt securities.

In determining the balance of payment between two countries, it is important to know what goods are being traded in and out. This can provide valuable insight into any trade imbalances. Decision makers can use this information to formulate strategies that will help rectify any deficits.

Overall, both current account and capital/financial accounts play key roles when it comes down to understanding how different nations interact with each other from financial standpoint thus making their analysis essential for country’s economic performance overall.