Question : Which of the following is not a component of the financial account?
Option 1: Foreign direct investment
Option 2: Portfolio investment
Option 3: international borrowing
Option 4: Merchandise trade balance
Answer (1)
17th Jan, 2024
Correct Answer: Merchandise trade balance
Solution :
The correct answer is (d) Merchandise trade balance.
The merchandise trade balance refers to the difference between the value of a country's exports and the value of its imports of goods. It is a component of the current account, not the capital account. Foreign direct investment, portfolio investment, and international borrowing are all types of capital account transactions.
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