I got this question wrong on the Schweser mock exam and I don’t understand why the answer is Capital account but not Current account.
Q: A Canadian firm purchases the rights to extract oil from a field in Mexico. Which balance of payments account will reflect this transaction
A: Capital account
B: Current account
C: Financial account
The explanation is that “Rights to natural resources that fall into the category of non-produced, non-financial assets are a component of the capital account.” from Schweser
My point is purchasing the right to extract oil in Mexico isn’t part of factors of production which is include in current account?
Factor of production includes land, labor, resources etc.
Can someone please explain it to me? thank you.