Question : The capital account of the Balance of Payments includes transactions related to:
Option 1: Imports and exports of goods
Option 2: Income from foreign investments
Option 3: International transfers of funds
Option 4: International borrowing and lending
Correct Answer: International borrowing and lending
Solution :
The correct answer is (d) International borrowing and lending.
The capital account records transactions such as loans, bond issuances, and other forms of borrowing and lending between residents and non-residents. It reflects the changes in a country's external financial assets and liabilities resulting from these borrowing and lending activities. The capital account includes transactions related to international borrowing and lending activities.
