ECONOMICS (CBSE/UGC NET)

ECONOMICS

BALANCE OF PAYMENTS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which account of BOP records all such transactions between residents of a country and the rest of the world which cause a change (increase or decrease) in the assets (money owed to) or liability (money owed) status of residents of a country or its government?
A
Current Account
B
Capital & Financial Account
C
Accomodating account
D
Net errors and admissions account
Explanation: 

Detailed explanation-1: -The capital account of BOP records all those transactions, between the residents of a country and the rest of the world, which cause a change in the assets or liabilities of the residents of the country or its government. It is related to claims and liabilities of financial nature.

Detailed explanation-2: -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-3: -The capital account measures the capital transfers between U.S. residents and foreign residents. The financial account reflects increases or decreases in a country’s ownership of international assets.

Detailed explanation-4: -The current account is used to mark the inflow and outflow of goods and services into a country. The capital account is where all international capital transfers are recorded.

Detailed explanation-5: -Balance Of Payment (BOP) is a statement that records all the monetary transactions made between residents of a country and the rest of the world during any given period.

There is 1 question to complete.