In the context of Balance on current account, which of the following is included in Invisibles?
Show answer & explanation
Correct answer: A
Explanation
Correct Answer:
Option 1: Services
Explanation:
In the Current Account, 'Invisibles' refer to those elements that do not manifest in the form of tangible goods. This category includes services (such as tourism, banking, and insurance), income (such as interest and dividends), and transfers (such as remittances). Services constitute the most significant component of 'Invisibles' and contribute substantially to a country's foreign exchange earnings. In India, exports from the service sector play a pivotal role in strengthening the economy.
Additional Facts:
Option 1: Correct Answer.
Option 2: FDI falls under the Capital Account.
Option 3: FII also falls under the Capital Account.
Option 4: External debt is included in the Capital Account.
Potential Questions for Upcoming Exams:
Question: What does the Current Account comprise?
Answer: Goods and Services
Question: What are the two components of the Balance of Payments?
Answer: Current Account and Capital Account
Question: What does FDI stand for?
Answer: Foreign Direct Investment
Question: What is the significance of the service sector?
Answer: Foreign exchange earnings