Which of the following constitute Capital Account? 1. Foreign Loans 2. Foreign Direct Investment 3. Private Remittances 4. Portfolio Investment Select the correct answer using the codes given below.
Explanation
1. Foreign Loans – These are borrowings from abroad by the government or private sector. They are capital inflows and part of the Capital Account.
2. Foreign Direct Investment (FDI) – Investment by foreign entities in domestic companies, creating a long-term interest in the economy, is part of the Capital Account.
3. Private Remittances – These are funds sent by individuals (like migrant workers) to their home country. They are part of the Current Account, not the Capital Account.
4. Portfolio Investment – Investments in stocks, bonds, and other financial assets by foreigners in the domestic market are capital inflows, part of the Capital Account.