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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


Team Careers360 3rd Jan, 2024
Answer (1)
Team Careers360 8th Jan, 2024

Correct Answer: Domestic investment in foreign assets


Solution : The correct option is d) Domestic investment in foreign assets

A capital outflow refers to the movement of funds or investments from one country to another. It represents the flow of capital from the domestic economy to foreign economies. Domestic investment in foreign assets, such as purchasing foreign stocks, bonds, or real estate, is an example of a capital outflow. This outflow of capital contributes to the balance of payments, which records all transactions between residents and non-residents in a country's economy.

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