Economic Awareness - Sectors of Indian Economy
Which of the following statements about the Capital Account in the Balance of Payments is CORRECT?
Which of the following statements about the Capital Account in the Balance of Payments is CORRECT?
hard Q9 of 15
Step-by-Step Solution
Step 1: Recall Capital Account components
The Capital Account records capital transfers and acquisition/disposal of non-produced, non-financial assets such as patents, copyrights, trademarks.Step 2: Analyze each option
Foreign direct investment inflows/outflows are Financial Account transactions. Trade in goods and services belong to the Current Account. Changes in foreign exchange reserves are recorded in the Financial Account. Only acquisition and disposal of patents and copyrights belong to the Capital Account.Final Answer:
It includes transactions related to acquisition and disposal of patents and copyrights → Option AQuick Check:
Capital Account = capital transfers and non-produced assets ✅
Quick Trick: Patents and copyrights are non-produced assets in Capital Account.
Common Mistakes:
MISTAKES- Confusing FDI and reserves with Capital Account items.
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