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Which of the following is/are part of Capital Account in Balance of Payments?
1. External bonds issued by the Government of India.
2. Unilateral transfers like gifts and donations.
3. Quota payment to IMF.
Select the correct code:
1. External bonds issued by the Government of India.
2. Unilateral transfers like gifts and donations.
3. Quota payment to IMF.
Select the correct code:
- a)1 and 2 only
- b)1 and 3 only
- c)2 and 3 only
- d)1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following is/are part of CapitalAccount in Balance of Pay...
Capital Account includes FDI, borrowing, quota to imf, external bonds issued gifts and donations come under current account.
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Which of the following is/are part of CapitalAccount in Balance of Pay...
Capital Account in Balance of Payments
The capital account is one of the two main components of the balance of payments, the other being the current account. It records the flow of funds between a country and the rest of the world for the purpose of investment and borrowing. The capital account consists of two sub-accounts: the capital transfers and the acquisition and disposal of non-produced, non-financial assets.
1. External bonds issued by the Government of India
External bonds issued by the Government of India are a part of the capital account. When the government issues bonds to foreign investors, it attracts capital flows into the country. These bonds represent a debt obligation of the Indian government to the bondholders and are included in the capital account as they involve cross-border financial transactions.
2. Unilateral transfers like gifts and donations
Unilateral transfers, such as gifts and donations, are not a part of the capital account. These transfers are recorded in the current account of the balance of payments. The current account captures the flow of goods, services, income, and current transfers between a country and the rest of the world. Unilateral transfers are considered as current transfers and do not involve any exchange of assets or liabilities. They are recorded separately in the current account to measure the net transfer of resources.
3. Quota payment to IMF
Quota payment to the International Monetary Fund (IMF) is also a part of the capital account. Quota payments represent the capital contribution made by member countries to the IMF. These contributions determine a country's voting power, access to financial resources, and participation in decision-making within the IMF. Quota payments are considered as capital transfers and are included in the capital account as they involve the movement of financial resources across borders.
Conclusion
Based on the above analysis, option B is the correct answer. External bonds issued by the Government of India and quota payment to IMF are part of the capital account in the balance of payments. Unilateral transfers like gifts and donations, on the other hand, are recorded in the current account.
The capital account is one of the two main components of the balance of payments, the other being the current account. It records the flow of funds between a country and the rest of the world for the purpose of investment and borrowing. The capital account consists of two sub-accounts: the capital transfers and the acquisition and disposal of non-produced, non-financial assets.
1. External bonds issued by the Government of India
External bonds issued by the Government of India are a part of the capital account. When the government issues bonds to foreign investors, it attracts capital flows into the country. These bonds represent a debt obligation of the Indian government to the bondholders and are included in the capital account as they involve cross-border financial transactions.
2. Unilateral transfers like gifts and donations
Unilateral transfers, such as gifts and donations, are not a part of the capital account. These transfers are recorded in the current account of the balance of payments. The current account captures the flow of goods, services, income, and current transfers between a country and the rest of the world. Unilateral transfers are considered as current transfers and do not involve any exchange of assets or liabilities. They are recorded separately in the current account to measure the net transfer of resources.
3. Quota payment to IMF
Quota payment to the International Monetary Fund (IMF) is also a part of the capital account. Quota payments represent the capital contribution made by member countries to the IMF. These contributions determine a country's voting power, access to financial resources, and participation in decision-making within the IMF. Quota payments are considered as capital transfers and are included in the capital account as they involve the movement of financial resources across borders.
Conclusion
Based on the above analysis, option B is the correct answer. External bonds issued by the Government of India and quota payment to IMF are part of the capital account in the balance of payments. Unilateral transfers like gifts and donations, on the other hand, are recorded in the current account.
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Which of the following is/are part of CapitalAccount in Balance of Payments?1. External bonds issued by the Government of India.2. Unilateral transfers like gifts and donations.3. Quota payment to IMF.Select the correct code:a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer?
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