Economic Awareness - Sectors of Indian Economy
Which of the following is a capital transfer recorded in the Capital Account of the Balance of Payments?
Which of the following is a capital transfer recorded in the Capital Account of the Balance of Payments?
medium Q6 of 15
Step-by-Step Solution
Step 1: Define capital transfers
Capital transfers include grants and aid related to capital formation such as infrastructure, debt forgiveness, and transfer of ownership of fixed assets.Step 2: Analyze options
Foreign aid grants for infrastructure development are capital transfers recorded in the Capital Account. Interest earned on foreign investments is net income in the Current Account. Exports of engineering services are trade in services, part of the Current Account. Foreign direct investment inflows are recorded in the Financial Account.Final Answer:
Foreign aid grants for infrastructure development → Option BQuick Check:
Foreign aid grants for infrastructure development = correct ✅
Quick Trick: Aid for capital projects is a capital transfer.
Common Mistakes:
MISTAKES- Confusing income flows with capital transfers.
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