Question : Which of the following is an example of a capital account item in the Balance of Payments?
Option 1: Import of raw materials
Option 2: Export of software services
Option 3: Foreign investment in domestic stocks
Option 4: Remittances by overseas workers
Correct Answer: Foreign investment in domestic stocks
Solution : The correct answer is (c) Foreign investment in domestic stocks.
The capital account in the balance of payments records capital flows between countries. It includes transactions related to investments and changes in a country's foreign assets and liabilities. The capital account captures the movement of financial capital across borders.
Foreign investment in domestic stocks, such as when investors from one country purchase stocks or shares of domestic companies in another country, is an example of a capital account item. This transaction involves the transfer of financial capital from one country to another and affects a country's stock of foreign assets and liabilities.
Question : Which of the following is an example of a unilateral transfer in the Balance of Payments?
Option 1: Export of goods
Option 2: Import of services
Option 3: Remittances from overseas workers
Option 4: Foreign direct investment
Question : Which of the following is an example of a capital account transaction in the Balance of Payments?
Option 1: Import of goods
Option 2: Export of services
Option 3: Foreign investment in domestic real estate
Option 4: Repayment of foreign debt
Question : Which of the following is an example of an invisible item in the Balance of Payments?
Option 1: Import of machinery
Question : Which of the following transactions will be recorded in the capital account of the Balance of Payments?
Option 3: Foreign investment in domestic companies
Option 4: Foreign aid received
Question : Which of the following is an example of a capital outflow in the balance of payments?
Option 1: Export of goods and services
Option 2: Import of goods and services
Option 3: foreign investment in domestic assets
Option 4: Domestic investment in foreign assets
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