ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In the current account
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In the capital account
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In the balance of trade section
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None of the above
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Detailed explanation-1: -Foreign investments are recorded in the capital account of balance of payments as such investments cause a change in the assets of the country.
Detailed explanation-2: -A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
Detailed explanation-3: -Foreign investment refers to the investment in domestic companies and assets of another country by a foreign investor.
Detailed explanation-4: -Foreign investment is when a domestic investor decides to purchase ownership of an asset in a foreign country. It involves cash flows moving from one country to another to execute the transaction. If the ownership stake is large enough, the foreign investor may be able to influence the entity’s business strategy.