Match List I with List II

Choose the correct answer from the options given below:

A-III, B-II, C-IV, D-I

In the case of "Investments made abroad" there is an outflow of currency which means it will be on the debit side of the account. Now, the question is whether it will be in the capital account or the current account. The capital account records all the transaction which affects the assets and liabilities of the countries. Whereas, the current account records all the transactions of goods and services which are recurring in nature. As investments made abroad increase the assets, thus it will be recorded on the "Debit side of the Capital account". In the same manner, "Remittances to a relative staying abroad" will be recorded on the "Debit side of the Current account" as there is an outflow of money without affecting the assets and liabilities status of the country. 

In the case of "Borrowing from IMF" there is an inflow of currency which means it will be on the credit side of the account. Now, the question is whether it will be in the capital account or the current account. The capital account records all the transaction which affects the assets and liabilities of the countries. Whereas, the current account records all the transactions of goods and services which are recurring in nature. As borrowing from IMF increases the liability status of the country, it will be recorded "Credit side of the Capital account". In the same manner, "Export of cotton clothes" will be recorded on the "Credit side of the Current account" as an inflow of money without affecting the assets and liabilities status of the country.