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Which of the following is a component of capital account?
Loans
Foreign investments
Change in Foreign Exchange Reserves
All of these
- Loans: These involve both borrowings and lending between countries and can be long-term or short-term. They are a part of the capital account because they reflect the flow of money across borders.
- Foreign investments: This includes direct investments, such as building factories, and portfolio investments, like buying foreign stocks and bonds. These investments indicate financial transactions with foreign entities.
- Change in Foreign Exchange Reserves: When a country buys or sells foreign currency to control the exchange rate, it affects the capital account, as it reflects the country’s financial asset management.
Option 4: All of these components fall under the capital account.
By: Milap Bansal ProfileResourcesReport error
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