Question
Which of the following constitute Capital Account?
I. Foreign Loans II. Foreign Direct Investment III. Private Remittances IV. Portfolio Investment Select the correct answer using the code given below:Solution
Capital Account is a sub-component under the Balance of Payments. It keeps a record of transactions of international nature which are concerned with altering either an Asset or Liability for the domestic country. Foreign Loans, Foreign Direct Investment and Portfolio Investment form a component of the Capital Account as they are adding up to the existing liabilities of the country as they warrant a future repayment liability.
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