Which of the following tends to improve a country’s financial account?Group of answer choicesDecrease in investment of stocks and bonds from foreigners.Increase in its exports.Increase in investment of stocks and bonds from foreigners.Increase in its imports.
Question
Which of the following tends to improve a country’s financial account?Group of answer choicesDecrease in investment of stocks and bonds from foreigners.Increase in its exports.Increase in investment of stocks and bonds from foreigners.Increase in its imports.
Solution
The financial account of a country tends to improve with an increase in investment of stocks and bonds from foreigners.
Here's why:
-
The financial account is a component of a country's balance of payments, it records transactions involving financial assets and liabilities between the country and the rest of the world.
-
When foreigners invest in a country's stocks and bonds, they are essentially buying assets in that country. This is recorded as an inflow in the financial account, which improves the balance.
-
On the other hand, an increase in exports or imports affects the current account, not the financial account. Similarly, a decrease in investment of stocks and bonds from foreigners would result in an outflow in the financial account, which would not improve the balance.
Similar Questions
Which of the following is the most important aim of reforms in the Indian Financial Sector? A. Promote financial inclusion B. Restrict foreign investments C. Discourage savings D. Increase tax rates on investments
Financial innovation contributes to:Question 9AnswerA.Economic stagnationB.Improved financial services and productsC.Increased risk in the financial systemD.Decreased efficiency
Which of the following will NOT occur if the money supply increases?Multiple choice question.Investment will increaseReal GDP will increaseInterest rates will increaseAggregate expenditure will increase
Which of the following best describes the situation when a country is experiencing more inflows than outflows in investments of stock and bonds?Group of answer choicesThe country is experiencing a current account deficit.The country is experiencing a financial account deficit.The country is experiencing a current account surplus.The country is experiencing a financial account surplus.
Considering all the other factors are constant, which of the following would be the result of a decrease in interest rates?An increase in investmentsA net capital inflowAn appreciation of the national currencyAn increase in consumption
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.