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State of balance of payments always balances regardless of the types of transactions.
- a)True
- b)False
- c)Partially true
- d)Can't be predicted
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
State of balance of payments always balances regardless of the types o...
False
Explanation:
The balance of payments (BoP) is a statement that summarizes all transactions between residents of a country and the rest of the world during a given period, typically a year. The BoP consists of two main accounts - the current account and the capital account.
While it is true that the BoP should, in theory, always balance, this is not always the case in practice. There are several reasons why the BoP may not balance, such as:
1. Recording errors: Errors can occur when recording transactions, leading to discrepancies in the BoP.
2. Time lags: There may be time lags between when a transaction occurs and when it is recorded in the BoP.
3. Illegal activities: Transactions related to illegal activities, such as smuggling or money laundering, may not be recorded in the BoP.
4. Statistical discrepancies: Statistical discrepancies can arise due to differences in the sources and methods used to compile data.
In conclusion, while the BoP should always balance in theory, in practice, it may not always do so due to various factors. Therefore, option B is the correct answer.
Explanation:
The balance of payments (BoP) is a statement that summarizes all transactions between residents of a country and the rest of the world during a given period, typically a year. The BoP consists of two main accounts - the current account and the capital account.
While it is true that the BoP should, in theory, always balance, this is not always the case in practice. There are several reasons why the BoP may not balance, such as:
1. Recording errors: Errors can occur when recording transactions, leading to discrepancies in the BoP.
2. Time lags: There may be time lags between when a transaction occurs and when it is recorded in the BoP.
3. Illegal activities: Transactions related to illegal activities, such as smuggling or money laundering, may not be recorded in the BoP.
4. Statistical discrepancies: Statistical discrepancies can arise due to differences in the sources and methods used to compile data.
In conclusion, while the BoP should always balance in theory, in practice, it may not always do so due to various factors. Therefore, option B is the correct answer.
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Community Answer
State of balance of payments always balances regardless of the types o...
State of BoP need not always balances as different account of BoP (Current account and Capital account) might have different balance.
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State of balance of payments always balances regardless of the types of transactions.a)Trueb)Falsec)Partially trued)Cant be predictedCorrect answer is option 'B'. Can you explain this answer?
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