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Question : Which of the following transactions will be recorded in the capital account of the Balance of Payments?
Option 1: Import of goods
Option 2: Export of services
Option 3: Foreign investment in domestic companies
Option 4: Foreign aid received
Correct Answer: Foreign investment in domestic companies
Solution : The correct answer is (c) Foreign investment in domestic companies
The capital account of the Balance of Payments records capital transfers and transactions involving the acquisition or disposal of non-financial assets. Foreign investment in domestic companies, such as foreign direct investment or portfolio investment, is a capital account transaction. It represents the movement of capital from one country to another and is recorded in the capital account.
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