The Capital Account of Balance of Payments includes:

The correct answer is Option (4) → External Commercial Borrowing.

Trade in goods and services, income and transfers go into the current account of the balance of payments. Dealings in assets, such as investment and borrowing across borders, go into the capital account. An external commercial borrowing is a loan taken from foreign lenders; it creates a liability to the rest of the world and brings money in, so it is recorded in the capital account.

Why the other options are incorrect

• Option (1) Imports and Exports of Visibles. — Incorrect. Visibles are goods, and trade in goods is the record of merchandise exports and imports. It belongs to the current account, which records trade in goods and services and transfer payments.

• Option (2) Imports and Exports of Invisibles. — Incorrect. Invisibles are services, such as transport, insurance and software, together with income and transfers. They are current account items, not transactions in assets.

• Option (3) Net Factor Income. — Incorrect. This is the income earned by residents from abroad (wages, interest, profit) less the income paid to non-residents. It is an income flow and is recorded in the current account, not a purchase or sale of assets.