Question

Which one of the following items is included in the capital account of the balance of payments of a country?

• A. Invisibles
• B. Investment incomes
• C. Commercial borrowings
• D. Private transfers

Answer 1

The correct option is C Commercial borrowings

The capital account of a country consists of its transaction in financial assets in the form of short-term and long-term lending and borrowings and private and official investments.
There are two types of transactions in the capital account-private and government. Private transactions include all types of investments-direct and portfolio and short-term. Government transactions consist of loans to and from foreign official agencies.