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Consider the following statements regarding Balance of Payments (BoP):
It is a record of transactions between residents of a country with the rest of the world.
It is not independent on the currency of the transaction
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
Consider the following statements regarding Balance of Payments (BoP)...
- Statement 1 is correct: Balance of Payments is the record of all economic transactions between the residents of the country and the rest of the world in a particular period of time. These transactions include the transactions in goods, services and assets (like financial capital, etc).
- Statement 2 is correct: The balance of payments (BoP) is not independent on the currency of the transaction. For e.g. the transaction of India buying Oil from Iran is under the balance of payments even if the payment is made in Indian rupees (INR).
Most Upvoted Answer
Consider the following statements regarding Balance of Payments (BoP)...
Balance of Payments (BoP)
The Balance of Payments (BoP) is a systematic record of all economic transactions between residents of a country and the rest of the world. It reflects a country’s economic transactions with the rest of the world for a given period, which is usually a year. The BoP is divided into two accounts, namely the current account and the capital account.
Statement 1: It is a record of transactions between residents of a country with the rest of the world.
This statement is correct. The BoP records all transactions between a country and the rest of the world, including exports and imports of goods and services, income flows, and financial transactions.
Statement 2: It is not independent on the currency of the transaction.
This statement is also correct. The BoP records all transactions in their respective currencies, which are then converted into the country’s local currency. Therefore, the BoP is not independent of the currency of the transaction.
Conclusion
Both statements are correct. The Balance of Payments (BoP) is a record of transactions between residents of a country with the rest of the world and is not independent of the currency of the transaction.
The Balance of Payments (BoP) is a systematic record of all economic transactions between residents of a country and the rest of the world. It reflects a country’s economic transactions with the rest of the world for a given period, which is usually a year. The BoP is divided into two accounts, namely the current account and the capital account.
Statement 1: It is a record of transactions between residents of a country with the rest of the world.
This statement is correct. The BoP records all transactions between a country and the rest of the world, including exports and imports of goods and services, income flows, and financial transactions.
Statement 2: It is not independent on the currency of the transaction.
This statement is also correct. The BoP records all transactions in their respective currencies, which are then converted into the country’s local currency. Therefore, the BoP is not independent of the currency of the transaction.
Conclusion
Both statements are correct. The Balance of Payments (BoP) is a record of transactions between residents of a country with the rest of the world and is not independent of the currency of the transaction.
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Consider the following statements regarding Balance of Payments (BoP): It is a record of transactions between residents of a country with the rest of the world. It is not independent on the currency of the transaction Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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