In the context of the Balance of Payments (BO

Solution: · The Financial Account tracks cross-border changes in asset ownership. · Credit (Positive) Entries represent a net inflow of funds or an increase in the country's liabilities to foreigners. o FDI Inflow: When a foreign entity (e.g., a company) buys a domestic asset (factory), money flows into the domestic economy. This is an increase in domestic liability (the factory is now owed to foreigners) and is recorded as a credit in the Financial Account. · Why others are incorrect: A (dividend income) is a Current Account Credit (Factor Income). B (foreign aid) is a Current Account Debit (Transfer). D (interest payment) is a Current Account Debit (Factor Income).