Question : Which of the following is a capital account transaction?
Option 1: Buying goods and services from a foreign country
Option 2: Receiving foreign aid
Option 3: Making a foreign direct investment
Option 4: Earning income from a foreign investment
Correct Answer: Making a foreign direct investment
Solution : The correct answer is c) Making a foreign direct investment
Making a foreign direct investment (FDI) is a capital account transaction. The capital account of the Balance of Payments (BoP) records transactions related to the acquisition and disposal of financial assets and liabilities between residents and non-residents. Foreign direct investment refers to the investment made by residents of one country in physical assets, such as factories or businesses, in another country.
Option 1: Exporting goods and services
Option 2: Making a foreign direct investment
Option 3: Receiving income from a foreign investment
Option 4: Paying for foreign aid
Option 1: Receiving foreign aid
Option 3: Exporting goods and services
Option 4: Borrowing from a foreign bank
Question : Which of the following is an example of a capital account transaction?
Option 1: Importing goods and services from another country
Option 2: Exporting goods and services to another country
Option 3: Buying foreign stocks and bonds
Option 4: Receiving foreign aid
Question : Which of the following is not a capital account transaction?
Option 1: Purchasing foreign stocks and bonds
Option 3: Borrowing from a foreign bank
Option 4: Buying goods and services from a foreign country
Option 1: Importing goods from another country
Option 2: Exporting goods to another country
Option 3: Foreign direct investment (FDI)
Option 4: Receiving a foreign aid grant
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