The capital account measures changes in foreign ownership of domestic assets, including financial assets like stocks and bonds, as well as physical assets. A is incorrect because it describes the current account. B is incorrect because it describes the balance of trade. D is incorrect because it describes the balance of payments, which includes both the current account and the capital account.

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The Capital Account

Question 77

Multiple Choice

The capital account:

A) is the sum of the balance of trade,net income on capital held abroad,and net transfer payments.
B) is the difference between exports and imports.
C) measures changes in foreign ownership of domestic assets,including financial assets like stocks and bonds,as well as physical assets.
D) is a summary of all of the economic transactions between residents of one country and residents of the rest of the world.

Correct Answer: