Question : Which of the following is not a current account transaction?
Option 1: Import of goods and services
Option 2: Export of goods and services
Option 3: Transfer payments
Option 4: Foreign direct investment
Correct Answer: Foreign direct investment
Solution : The correct answer is (d) Foreign direct investment
Foreign direct investment (FDI) is not considered a current account transaction. FDI involves a long-term investment in a foreign country, typically in the form of establishing or acquiring a business. It falls under the capital account of the balance of payments, which records financial transactions related to investments and capital flows.
On the other hand, the current account includes transactions related to the exchange of goods, services, income, and unilateral transfers.
