CSEET · Economic and Business Environment · Global Environment
In the Balance of Payments of a country, which of the following transactions is recorded under the current account?
Export of software services is recorded in the current account because the current account covers trade in goods and services, income and transfers. Foreign direct investment, loan repayments and purchases of foreign securities are capital or financial account transactions.
- AReceipt of foreign direct investment by an Indian company
- BRepayment of an external commercial borrowing
- CExport of software services by an Indian firmCorrect
- DPurchase of foreign government securities by an Indian mutual fund
Explanation
The current account records trade in goods and services, primary income and secondary income (transfers). Export of software services is a services export and so belongs here. FDI, loan repayment and purchase of foreign securities are capital or financial account items, so they are wrong.
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