Question : Which of the following is not a current account transaction?
Option 1: Foreign direct investment
Option 2: Export of goods and services
Option 3: Transfer payments
Option 4: Income from foreign investments
Answer (1)
22nd Jan, 2024
Correct Answer: Foreign direct investment
Solution : The correct answer is (a) Foreign direct investment
Foreign direct investment (FDI) is not a current account transaction. FDI is a capital account transaction, as it involves the acquisition or establishment of long-term assets, such as businesses or property, in a foreign country. It represents an investment in the real sector of the economy and is recorded in the capital account of the balance of payments.
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