Question : The financial 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: Purchase and sale of foreign currency
Correct Answer: Income from foreign investments
Solution : The correct answer is (b) Income from foreign investments.
The financial account of the Balance of Payments includes transactions related to the movement of financial assets and liabilities between residents and non-residents.
Income from foreign investments: This refers to the income earned by residents from their investments in foreign assets, such as dividends, interest, and profits. It is recorded as a component of the financial account.
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