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Class 12 Exam  >  Class 12 Questions  >  If value of visible exports is greater than t... Start Learning for Free
If value of visible exports is greater than the value of invisible imports, the balance relates to
  • a)
    Current account BoP
  • b)
    Trade deficit
  • c)
    Capital account BoP
  • d)
    Can't be determined
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
If value of visible exports is greater than the value of invisible imp...
Explanation:

When the value of visible exports is greater than the value of invisible imports, it means that a country is earning more from its exports of goods than it is spending on imports of services. However, it does not provide enough information to determine the balance of payments.

Balance of Payments (BoP)

The balance of payments is a record of all the economic transactions between a country and the rest of the world over a specific period, usually a year. It is divided into two main accounts: the current account and the capital account.

Current Account

The current account records all transactions related to the import and export of goods and services, income from investments, and transfers. The current account balance is the difference between a country's earnings from exports and its spending on imports, including services.

Capital Account

The capital account records all transactions related to the movement of capital, such as foreign investment, loans, and foreign aid.

Trade Deficit

A trade deficit occurs when a country's import of goods and services exceeds its export of goods and services. In other words, it means that a country is spending more on imports than it is earning from exports.

Conclusion

In this scenario, it is not possible to determine the balance of payments because we do not have enough information about the other transactions in the current and capital accounts. Therefore, the correct answer is option D, which is "Can't be determined."
Community Answer
If value of visible exports is greater than the value of invisible imp...
In this case, we cannot determine the value of surplus or deficit as the export of visibles and import of invisibles cannot be compared.
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