Question : Which of the following is not a component of the capital account?
Option 1: Foreign direct investment
Option 2: Portfolio investment
Option 3: International borrowing
Option 4: International transfers and gifts
Answer (1)
26th Jan, 2024
Correct Answer: International transfers and gifts
Solution : The correct answer is (d) International transfers and gifts
International transfers and gifts are not a component of the capital account of the Balance of Payments (BoP). They are typically recorded in the current account, specifically in the transfer component. International transfers and gifts involve items such as foreign aid, remittances, and unilateral transfers.
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