Question : The capital account of the Balance of Payments records 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 transfers of funds
Solution : The correct answer is (c) International transfers of funds.
The capital account captures capital transfers, which involve the transfer of ownership of non-produced, non-financial assets between residents and non-residents. These transfers can include items such as copyrights, patents, trademarks, and licenses.
International transfers of funds is indeed a component of the capital account. It includes transfers of funds between residents and non-residents, such as remittances, gifts, and foreign aid.
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