Question : Which of the following is an example of a capital account transaction?
Option 1: Importing goods and services from another country
Option 2: Exporting goods and services to another country
Option 3: Buying foreign stocks and bonds
Option 4: Receiving foreign aid
Correct Answer: Buying foreign stocks and bonds
Solution : The correct answer is c) Buying foreign stocks and bonds
Buying foreign stocks and bonds is an example of a capital account transaction. The capital account of the Balance of Payments (BoP) records transactions related to the acquisition and disposal of financial assets and liabilities between residents and non-residents. This includes activities such as purchasing foreign stocks, bonds, and other financial instruments.
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