ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A debit on the capital and financial account
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A credit on the current account
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A debit on the current account
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A credit on the capital and financial account
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Detailed explanation-1: -The balance of payments summarises the economic transactions of an economy with the rest of the world. These transactions include exports and imports of goods, services and financial assets, along with transfer payments (like foreign aid).
Detailed explanation-2: -Capital account – The record of a country’s international transactions involving purchases or sales of financial and real assets (borrowing, lending, and investments).
Detailed explanation-3: -Statement 3 is correct: The Balance of Payments (BoP) includes both the current account and capital account, in the capital account there is the nation’s imports and exports of capital and foreign aid.
Detailed explanation-4: -A country’s Balance of Payments (BOP) consists of current account, capital account and official settlement account. The Foreign Direct Investment (FDI) inflows are reported under the capital account of BOP.