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
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.
Question : Which of the following is an example of a capital flow in the balance of payments?
Option 3: Foreign aid received
Option 4: Remittances from abroad
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 transactions would be recorded as a debit entry in the Balance of Payments?
Option 1: Export of goods
Option 2: Import of services
Option 3: Foreign investment in domestic assets
Option 4: Receipt of foreign aid
Question : Which of the following is not a component of the capital account in the balance of payments?
Option 1: Foreign direct investment
Option 2: Loans to foreign countries
Option 3: Purchases of foreign currency by domestic residents
Option 4: Export and import of goods and services
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
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