ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Balanced
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Surplus
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Deficit
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None of these
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Detailed explanation-1: -1 Answer. B. When receipts of foreign exchange are more than payments of foreign exchange, BOP is in Surplus.
Detailed explanation-2: -Excess of foreign exchange receipts over foreign exchange payments on account of accommodating transactions equals deficit in the balance of payments.
Detailed explanation-3: -A Surplus in the BOP occurs when Total Receipts exceeds Total Payments. Thus, BOP= CREDIT>DEBIT. A Deficit in the BOP occurs when Total Payments exceeds Total Receipts.
Detailed explanation-4: -Balance of payments surplus occurs when a country’s total exports are higher than its imports. This helps to generate capital to fund its domestic productions.
Detailed explanation-5: -Balance of Payment Surplus is a situation when autonomous receipts are more than autonomous payments.