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With reference to the Financial account of Balance of Payment, consider the following statements:
1. The financial account is the measurement of current ownership of the international assets .
2. Investment in securities and commodities form a component of Financial Account under Balance of Payments.
3. Increase in the foreign ownership of domestic assets adds to the financial account.
Which of the statements given above is/are correct?
  • a)
    1 and 3 only
  • b)
    2 and 3 only
  • c)
    1 and 2 only
  • d)
    1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
With reference to the Financial account of Balance of Payment, conside...
  • The financial account measures transactions involving financial assets and liabilities between residents and non-residents. It includes items such as direct investment, portfolio investment, financial derivatives, and other investments. While it reflects changes in ownership of international assets, it does not solely measure current ownership. Therefore, statement 1 is incorrect.
  • Investment in securities and commodities indeed forms a component of the financial account under the Balance of Payments. This includes purchases and sales of stocks, bonds, and other financial instruments, as well as transactions related to commodities. Hence, statement 2 is correct.
  • Increase in foreign ownership of domestic assets, such as when a foreign entity buys shares of a domestic company or invests in real estate in the domestic market, contributes to the financial account. So, statement 3 is also correct.
Therefore, the correct statements are 2 and 3, making option (b) the correct choice.
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With reference to the Financial account of Balance of Payment, consider the following statements:1. The financial account is the measurement of current ownership of the international assets .2. Investment in securities and commodities form a component of Financial Account under Balance of Payments.3. Increase in the foreign ownership of domestic assets adds to the financial account.Which of the statements given above is/are correct?a)1 and 3 onlyb)2 and 3 onlyc)1 and 2 onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer?
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With reference to the Financial account of Balance of Payment, consider the following statements:1. The financial account is the measurement of current ownership of the international assets .2. Investment in securities and commodities form a component of Financial Account under Balance of Payments.3. Increase in the foreign ownership of domestic assets adds to the financial account.Which of the statements given above is/are correct?a)1 and 3 onlyb)2 and 3 onlyc)1 and 2 onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Financial account of Balance of Payment, consider the following statements:1. The financial account is the measurement of current ownership of the international assets .2. Investment in securities and commodities form a component of Financial Account under Balance of Payments.3. Increase in the foreign ownership of domestic assets adds to the financial account.Which of the statements given above is/are correct?a)1 and 3 onlyb)2 and 3 onlyc)1 and 2 onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Financial account of Balance of Payment, consider the following statements:1. The financial account is the measurement of current ownership of the international assets .2. Investment in securities and commodities form a component of Financial Account under Balance of Payments.3. Increase in the foreign ownership of domestic assets adds to the financial account.Which of the statements given above is/are correct?a)1 and 3 onlyb)2 and 3 onlyc)1 and 2 onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer?.
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