Question : Which of the following is not a component of the financial account?
Option 1: Foreign direct investment
Option 2: Portfolio investment
Option 3: Official reserve assets
Option 4: Current account balance
Correct Answer: Current account balance
Solution : The correct answer is (d) Current account balance
The current account balance is not a component of the financial account. The financial account measures the inflows and outflows of financial assets and liabilities, whereas the current account records the flows of goods, services, income, and current transfers between a country and the rest of the world.
Question : Which of the following is not a component of the capital account?
Option 3: international borrowing
Option 4: Current account transactions
Option 3: International borrowing
Option 3: international transfers and gifts
Option 4: Merchandise trade balance
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