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    Question

    What is the difference between partial and full capital

    account convertibility?
    A Partial capital account convertibility allows all categories of transactions, while full capital account convertibility restricts certain categories of transactions. Correct Answer Incorrect Answer
    B Partial capital account convertibility restricts certain categories of transactions, while full capital account convertibility allows all categories of transactions. Correct Answer Incorrect Answer
    C Partial capital account convertibility allows foreign direct investment and portfolio investment, while full capital account convertibility restricts these categories of transactions. Correct Answer Incorrect Answer
    D Partial capital account convertibility allows the issuance of foreign currency-denominated debt, while full capital account convertibility restricts this category of transactions. Correct Answer Incorrect Answer
    E None of the above. Correct Answer Incorrect Answer

    Solution

    Partial capital account convertibility: In this type of capital account convertibility, certain categories of transactions are allowed, while others are restricted. For example, a country may allow foreign direct investment and portfolio investment but restrict the repatriation of capital or the issuance of foreign currency-denominated debt. Full capital account convertibility: In this type of capital account convertibility, all categories of transactions are allowed without any restrictions. This means that individuals and institutions are free to move their money in and out of the country without any limitations.

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