ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Are not determined by considerations of profit
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Are considered by the positive or negative BOP status
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Lead to increase or decrease in official reserves with RBI
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All of these
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Detailed explanation-1: -Accommodating items are those economic transactions that are undertaken by the RBI with a view to correcting imbalances in the country’s BoP Account. These items are also known as ‘below the line items. ‘
Detailed explanation-2: -Accommodating Items or ‘below the line items’ are those which originate to ‘accommodate’ the BOP scenario. If there is BOP surplus or deficit then accommodating transactions are carried out in a deliberate manner to balance out the surplus/ deficit BOP.
Detailed explanation-3: -Accommodating items of trade are undertaken in order to maintain the balance in the BOP account.
Detailed explanation-4: -Accommodating transactions are compensating capital transactions which are meant to correct the disequilibrium in autonomous items of balance of payments. For example, if there is a current account deficit in the BOP, then this deficit is settled by capital inflow from abroad. Hence, correct answer is option C.
Detailed explanation-5: -Current account. Financial account. Capital account. Decision-making. Developing trade policies. Establishing fiscal objectives. Implementing growth strategies. Analyzing deficits.