Question : Which account in the Balance of Payments includes transactions related to foreign direct investment?
Option 1: Current Account
Option 2: Capital Account
Option 3: Financial Account
Option 4: Reserve Account
Correct Answer: Capital Account
Solution : The correct answer is (b) Capital Account.
Transactions related to foreign direct investment (FDI) are recorded in the Capital Account of the Balance of Payments.
The Capital Account of the Balance of Payments includes transactions related to changes in a country's ownership of non-financial assets and capital transfers. Foreign direct investment involves the acquisition of a lasting interest by a resident entity in one country (direct investor) in an enterprise resident in another country (direct investment enterprise). It represents a long-term investment and is considered a capital flow.
Question : The current account of the Balance of Payments includes:
Option 1: Trade in goods and services
Option 2: Financial transfers
Option 3: Capital transactions
Option 4: Foreign exchange reserves
Question : The balance of trade is a part of which account in the Balance of Payments?
Question : Which of the following is not a component of the financial account?
Option 1: Foreign direct investment
Option 2: Portfolio investment
Option 3: Official reserve assets
Option 4: Current account balance
Question : Which of the following is not a component of the capital account?
Question : Which account in the Balance of Payments records international borrowing and lending?
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