Question

Which of the following best describes Capital Account

Q: Answer-Which of the following best describes Capital Account Convertibility ?

Capital Account Convertibility refers to the freedom to convert local financial assets into foreign financial assets and vice versa at market-determined exchange rates without any restrictions. It allows free movement of capital across countries for investment, borrowing, and other financial transactions.

Convertibility ?

A Freedom to convert domestic currency into foreign currency for trade in goods and services only

B Freedom to convert domestic currency into foreign currency for all types of transactions, including capital assets and investments

C Restriction on the use of foreign exchange for current account transactions

D Policy allowing only NRIs to invest in domestic markets without restrictions

E A measure used to control inflation through monetary policy

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Which of the following best describes Capital Account

Solution