Question : Balance of payments consists of two main accounts: the current account and the ___________account.
Option 1: trade
Option 2: capital
Option 3: services
Option 4: investment
Correct Answer: capital
Solution : The correct answer is (b) capital
The balance of payments consists of two main accounts: the current account and the capital account. The current account records transactions related to the trade in goods and services, income flows, and current transfers between a country and the rest of the world. The capital account, on the other hand, records capital transactions, including financial investments, such as foreign direct investment and portfolio investment, as well as capital transfers. These two accounts together provide a comprehensive overview of a country's economic transactions with the rest of the world.
