Question : Which of the following is not a factor that affects the capital account balance?
Option 1: Interest rates
Option 2: Political stability
Option 3: Domestic savings rates
Option 4: Exchange rates
Answer (1)
18th Jan, 2024
Correct Answer: Domestic savings rates
Solution :
The correct answer is (c) Domestic savings rates.
Domestic savings rates primarily impact a country's domestic investment levels and the availability of funds for investment within the country. While domestic savings can indirectly influence the capital account balance by affecting the overall economic conditions and investment climate, it is not a direct factor that affects the capital account balance itself.
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