Question : Which of the following is a component of the capital account?
Option 1: Net exports of goods and services
Option 2: Net income from abroad
Option 3: Foreign direct investment
Option 4: Net transfer payments
Correct Answer: Foreign direct investment
Solution : The correct answer is c) Foreign direct investment
Foreign direct investment (FDI) is a component of the capital account of the Balance of Payments (BoP). The capital account tracks the inflows and outflows 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.
Question : Which of the following is not a component of the current account?
Option 1: Balance of trade in goods and services
Option 3: Net transfer payments
Option 4: Net capital inflows
Question : Which of the following is not a component of the current account in the balance of payments?
Option 1: Goods and services
Option 2: Income from abroad
Option 3: Transfer payments
Option 4: Capital flows
Question : Which of the following is not a current account transaction?
Option 1: Foreign direct investment
Option 2: Export of goods and services
Option 4: Income from foreign investments
Option 1: Exports of goods and services
Option 2: Imports of goods and services
Option 3: Income from abroad
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