ECONOMICS
BALANCE OF PAYMENTS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
True
|
|
|
False
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -Ans. (i) False, because Balance of Trade only records the export and import of visible items, i.e. goods. (ii) False, because external assistance are included in the current account of Balance of Payments as unilateral receipts..
Detailed explanation-2: -Borrowing from abroad are recorded in the capital account (credit side) of Balance of Payments as it is a foreign liability on the country and it is to be repaid with interest.
Detailed explanation-3: -Unilateral transfers received from abroad will be recorded as a credit item of BOP on current account. Answer: True.
Detailed explanation-4: -Foreign debt is money borrowed by a government, corporation or private household from another country’s government or private lenders. Foreign debt also includes obligations to international organizations such as the World Bank, Asian Development Bank (ADB), and the International Monetary Fund (IMF).
Detailed explanation-5: -Loans and borrowings by a country from the foreign countries or from the international money market are recorded in the Capital Account of the BOP. These borrowings can be in the form of commercial borrowings or in the form of assistance.