ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Export of goods
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Imports of services
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Grants and gifts
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FDI
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Detailed explanation-1: -Answer and Explanation: The correct answer is : C. US Capital inflow and outflow.
Detailed explanation-2: -The current account includes all the transactions related to export and import of goods and services, investment income, and unilateral transfers (remittances, gifts, grants etc.). The capital account includes all international asset transactions (FDI, FPI etc.).
Detailed explanation-3: -Detailed Solution. Current Account of Balance of payments does not include Investments. Current Account of Balance of payment is the sum of Balance of Trade, NetFactor income & Net Transfer payment. The current account of BOP is either positive meaning Surplus or Negative meaning Deficit.
Detailed explanation-4: -BoT just includes the balance between export and import of goods. BoP not only adds the service-trade but also many other components in the current account (Eg: Transfer payments) and capital account (FDI, loans etc).