In the context of Balance of Payment, which of the following is NOT included in Capital account?
Show answer & explanation
Correct answer: D
Explanation
Correct Answer:
Option 4: Remittances
Explanation:
The capital account of the Balance of Payments includes foreign institutional investment (FII), foreign direct investment (FDI), and external debt.
Remittances, however, are part of the current account and are therefore not included in the capital account.
Additional Facts:
The balance of payments has two parts: the current account and the capital account.
The current account includes goods trade, services, and transfers.
The capital account includes investments and loan transactions.
India is one of the largest remittance-receiving countries in the world.
Possible questions for the upcoming exam (with answers):
What are the main components of the balance of payments?
(Answer: Current account and capital account)
What items are included in the current account?
(Answer: Goods trade, services, income, and remittances/transfers)
What is the difference between FDI and FII?
(Answer: FDI involves long-term investment and control, while FII involves short-term investment and no control)
Which country brings the largest number of remittances to India?
(Answer: United Arab Emirates (UAE)/USA – both are major sources,