ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Current account of payments over current account receipts
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Capital account payments over capital account receipts
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Autonomous payments over autonomous receipts
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Accommodating payments over a accommodating receipts
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Detailed explanation-1: -Balance of Payment deficit is a situation when autonomous receipts are less than autonomous payments. Autonomous transactions are those transactions which are carried out with economic motive irrespective of the present position of the BOP. This situation arises only on account of autonomous transactions.
Detailed explanation-2: -BOP account is in surplus when autonomous receipts are more than the autonomous payments. BOP is in deficit when autonomous receipts are less than autonomous payments.
Detailed explanation-3: -The Balance of Payments is a statement that contains the transactions made by residents of a particular country with the rest of the world over a specific time period. It is also known as the balance of international payments and is often abbreviated as BOP.
Detailed explanation-4: -High outflow of foreign exchange to meet import demands like technology, machines, and equipment can lead to BoP deficit. Sustained rise in a country’s prices can often make foreign products cheaper, leading to a high volume of imports. Unstable tax structures, change in government, etc.
Detailed explanation-5: -A balance of payments surplus means the country exports more than it imports. It provides enough capital to pay for all domestic production.