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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


Team Careers360 19th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: Foreign investment in domestic real estate


Solution : The correct answer is (c) Foreign investment in domestic real estate.

A capital account transaction in the Balance of Payments refers to activities that involve changes in a country's foreign assets and liabilities. It includes capital transfers and the acquisition and disposal of non-produced, non-financial assets.

Foreign investment in domestic real estate: This is an example of a capital account transaction. When foreign entities invest in domestic real estate, it involves a change in a country's non-produced, non-financial assets and is recorded in the capital account.

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