ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The correct answer is c) autonomous transactions. Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called autonomous transactions.

Detailed explanation-2: -Autonomous transactions are called ‘autonomous’ because they happen on their own accord and not because of a country’s BOP scenario. ‘ Autonomous transactions will include imports and exports (current account transactions) and also lending or borrowing of loans (cross border) or payment or receipt of interests thereon.

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 dependent on other foreign exchange transactions other than Autonomous transactions are called ‘Accommodating transactions’.

Detailed explanation-5: -On the current account, merchandise exports and imports of goods are autonomous transactions. ADVERTISEMENTS: 2. On the capital account, receipts and repayments of long-term loans by private individuals are autonomous transactions.