ECONOMICS (CBSE/UGC NET)

ECONOMICS

BALANCE OF PAYMENTS

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

BMW pays $1 million to a U.S. shipper for transporting cars from Germany to the United States. How is this recorded in the US BOP?

A	credit
B	debit
C	Either A or B
D	None of the above

Explanation:

Detailed explanation-1: -The capital account, broadly defined, includes transactions in financial instruments and central bank reserves. Narrowly defined, it includes only transactions in financial instruments. The current account is included in calculations of national output, while the capital account is not.

Detailed explanation-2: -The balance of payments (BOP) is the record of all international financial transactions made by the residents of a country. There are three main categories of the BOP: the current account, the capital account, and the financial account.

Detailed explanation-3: -There are three main components that form the basis of the structure of balance of payments. The financial account, capital account, and current account.

There is 1 question to complete.