ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Balanceing in nature
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Below the line
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Both a and b
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neither a nor b
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Detailed explanation-1: -Accommodating transactions compensate the surplus or deficit brought about by autonomous transactions. It seeks to bring equality between the payments and receipts of foreign exchange. the deficit or to lower the deficit. Example: Drawings from SDR, borrowings from IMF or central banks of other countries etc.
Detailed explanation-2: -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.
Detailed explanation-3: -Accommodating Transactions refers to those international transactions which are undertaken to cover Surplus or Deficit in Autonomous transactions.
Detailed explanation-4: -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. ‘