In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Give reasons.
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Foreign investments in India will be recorded in the capital account of the BOP account because these give rise to foreign exchange liabilities. Foreign investment will be recorded on the credit side because it brings in foreign exchange.
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What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?