ECONOMICS (CBSE/UGC NET)

ECONOMICS

BALANCE OF PAYMENTS

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following describes something that would definitely be recorded as an increase in the current account?

A	An increase in net exports
B	Selling bonds domestically
C	Selling bonds to foreign citizens
D	An increase in real GDP
E	A decrease in factor income earned abroad

Explanation:

Detailed explanation-1: -The current account includes foreign transactions that are not associated with a future financial obligation, such as imports and exports. Therefore, when net exports increase, the current account balance increases.

Detailed explanation-2: -Current account of Balance of Payments account records only exports and imports of goods and services.

Detailed explanation-3: -Answer and Explanation: A current account records the transaction of trade of goods and services taking place with the foreign country.

Detailed explanation-4: -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.

There is 1 question to complete.