Economics · External Sector
With reference to capital flows and balance of payments dynamics, consider the following statements: I. Foreign Portfolio Investment inflows can improve the capital account balance without directly augmenting productive capacity. II. Persistent current account deficits necessarily imply an unsustainable external sector position. III. Sudden stops in capital inflows can transmit financial stress even in economies with low external debt. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1I and III only✓
- 2I and II only
- 3II and III only
- 4I, II and III
Correct answer
I and III only
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