Question : Which of the following is a component of the capital account?

Option 1: Net exports of goods and services

Option 2: Net income from abroad

Option 3: Foreign direct investment

Option 4: Net transfer payments


Team Careers360 17th Jan, 2024
Answer (1)
Team Careers360 23rd Jan, 2024

Correct Answer: Foreign direct investment


Solution : The correct answer is c) Foreign direct investment

Foreign direct investment (FDI) is a component of the capital account of the Balance of Payments (BoP). The capital account tracks the inflows and outflows of financial assets and liabilities between residents and non-residents. Foreign direct investment refers to the investment made by residents of one country in physical assets, such as factories or businesses, in another country.

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