Question

62. A rising capital account surplus indicates which of the following?
1. Firms are creating more income through interest receipt from abroad
2. Foreign exchange reserves are increasing
3. A higher inflow of foreign capital
Select the correct answers from the code given below.

• A. Only 1
• B. Only 1 and 2
• C. Only 3
• D. Only 2 and 3

Answer 1

The correct option is D Only 2 and 3

A capital account shows the net change in physical or financial asset ownership for a nation and, together with the current account, constitutes a nation’s balance of payments. The capital account includes foreign direct investment (FDI), portfolio and other investments, plus changes in the reserve account. A capital account may also refer to an account showing the net worth of a business at a specific point in time.