The correct answer is A - 1, B - 2, C - 3, and D - 4. Explanation & Key Takeaways: +-------------------------------+----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+ | List I | List II | +-------------------------------+----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+ | Capital transactions | Capital account The capital account includes both long-term and short-term capital transactions. It includes borrowings from and lendings to foreign countries, and the international flow of direct and portfolio investments. | | Unilateral transfers | Current account Unilateral transfers are recorded in the current account. Unilateral transfers relate to gifts, pensions, foreign aid, private remittances, charitable donations, etc. Unilateral transfers are often used to describe payments made by the government of one country to another country in the form of financial aid. | | Export and import of goods | Visible trade The balance of exports and imports of goods only is called the balance of visible trade | | Export and import of services | Invisible trade The balance of exports and imports of services and transfer payments is called the balance of invisible trade. | +-------------------------------+----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+ Hence, the correct matching is A - 1, B - 2, C - 3, and D - 4.