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Question : Which of the following is not a component of the capital account 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


Team Careers360 1st Jan, 2024
Answer (1)
Team Careers360 15th Jan, 2024

Correct Answer: Export and import of goods and services


Solution : The correct answer is (d) Export and import of goods and services

The capital account in the balance of payments records the flows of financial assets between a country and the rest of the world. It includes transactions related to investment, loans, and changes in ownership of financial assets. The export and import of goods and services, on the other hand, is part of the current account, which measures the flows of goods, services, and income between a country and the rest of the world.

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