ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Profit motive
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Above the line
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Not balanceing in nature
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All of above
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Detailed explanation-1: -Autonomous Items also known as ‘above the line items’ – are those international transactions which happen due to profit earning motive. All profit oriented international transactions – like export and import are autonomous transactions.
Detailed explanation-2: -Autonomous items are also known as ‘above the line items’ as these take place due to some economic motive, such as profit maximisation, and also on both current and capital accounts.
Detailed explanation-3: -Autonomous transactions are independent of the state of BOP Account. For example, if a foreign company is making investments in India with the aim of earning profit, then such a transaction is independent of the country’s BOP situation.
Detailed explanation-4: -Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called autonomous transactions.
Detailed explanation-5: -On the current account, merchandise exports and imports of goods are autonomous transactions. On the capital account, receipts and repayments of long-term loans by private individuals are autonomous transactions.