Question : Which of the following is not a capital account component in the balance of payments?
Option 1: Foreign direct investment
Option 2: Loans to foreign countries
Option 3: Purchases of foreign currency by domestic residents
Option 4: Export and import of goods and services
Correct Answer: Export and import of goods and services
Solution : The correct answer is (d) Export and import of goods and services
The export and import of goods and services is not a capital account component in the balance of payments. It is a component of the current account, which tracks the flow of goods, services, income, and current transfers between a country and the rest of the world. The current account includes exports and imports of goods and services, income earned from investments abroad, and current transfers such as remittances and foreign aid.
The capital account in the balance of payments records transactions related to changes in ownership of financial assets and liabilities between a country and the rest of the world. It includes items such as foreign direct investment, loans to and from foreign countries, purchases and sales of real estate and other assets, and changes in financial derivatives.
Related Questions
Trending Articles/News
