ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Visible items
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Invisible items
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Private capital
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Both Invisible items and Private capital
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Detailed explanation-1: -The capital transfer is another significant difference between BOT and BOP. Capital transfers are only included in a Balance of Payment. BOP records all capital receipts and payments.
Detailed explanation-2: -BOT – Balance of Trade In this, imports and exports of services are not included. The services include invisible items like insurance, banking, interest, dividends on assets, profits, software services, etc.
Detailed explanation-3: -Invisible items of BOP account are those which are not seen crossing the borders. These are not recorded at ports. All types of services like services of shipping, banking, tourism, investment services and unilateral transfers are invisible items.
Detailed explanation-4: -Balance of trade (BoT) is the difference that is obtained from the export and import of goods. Balance of payments (BoP) is the difference between the inflow and outflow of foreign exchange. Transactions related to goods are included in BoT. Transactions related to transfers, goods, and services are included in BoP.