Assertion Reason: Balance of Payment

assertion reason: balance of payment., bop



1.Assertion (A): Balance of Trade (BOT) includes exports and imports of goods only. Reason (R): BOT is a part of balance of payment (BOP).




... Answer is B)



2.Assertion (A): Trade surplus occurs when exports are greater than imports. Reason (R): Balance of trade is a part of capital account.




... Answer is C)



3.Assertion (A): NRI deposits recorded in the credit side of current accounts of BOP. Reason (R): NRI sending money to family members are recorded in the credit side of current account of BOP.




... Answer is D)



4.Assertion (A): Balance of payment is always balance when accomodating items are reflected as a part of capital account. Reason (R): Accomodating items are meant to restore a balance in BOP accounts.




... Answer is A)



5.Assertion (A): Money sent by NRIs to their relatives is to be recorded in current account of BOP. Reason (R): Exports of machinery is to be recorded in the current account of BOP.




... Answer is B)



6.Assertion (A): Demonstration effect is also cause of disequilibrium of deficit of BOP. Reason (R): Due to demonstration effect, there will be outflow of the money to the abroad from the economy.




... Answer is A)



7.Assertion (A):In a state of BOP equilibrium, there is increase in official reserves with the central bank of the country. Reason (R): Loans taken from IMF are included in the capital account of BOP.




... Answer is D)



8.Assertion (A):There may be surplus, deficit or balanced of balance of trade. Reason (R): Balance of payment is always balance in accounting sense.




... Answer is B)



9.Assertion (A): "borrowing from abroad" is recorded in the credit side of capital accounts of BOP. Reason (R): "Borrowings from abroad" leads to the receipt of foreign exchange from rest of the world.




... Answer is A)



10.Assertion (A): The alternative name of balance of trade is balance of visible trade or trade balances. Reason (R): Sending gift to the abroad is a part of balance of trade.




... Answer is C)



11.Assertion (A): Balance of trade does not record capital account transaction. Reason (R): Expenditure by the tourists is included in balance of trade.




... Answer is C)



12.Assertion (A): Autonomous item of BOP refer to international economic tranaction that take place due to some economic motive such as profit maximisation. Reason (R): Autonomous items are independent of the state of the country's BOP.




... Answer is B)



13. Assertion (A): Export and import of goods is treated as visible trade. Reason (R): Goods are tangible and therefore, can be seen while crossing the borders.




... Answer is A)



14.Assertion (A): Capital in balance of payment is recurring in nature. Reason (R): Capital transfers affect the asset and liabilities of a country.




... Answer is B)



15.Assertion (A): Balance of payments records trasactions related to goods as well services. Reason (R): Current account balance includes the balance of trade as well as balance on invisibles.




... Answer is B)



16.Assertion (A): Accommodating transactions are undertaken to make equilibrium in BOP account. Reason (R): Accommodating transaction are also known as below the line items of BOP.




... Answer is B)



17.Assertion (A): When balance of trade is in deficit, the balance of payment is not in deficit. Reason (R): Balance of trade is only a part of BOP accounts.




... Answer is A)



18.Assertion (A): purchase of second hand Machinery from abroad is not recorded in the BOP. Reason (R): Sale and purchase of second hand goods are not included in the estimation of national income.




... Answer is D)



19.Assertion (A): Capital account transactions do not give rise to future claims. Reason (R): Capital account transactions reveal borrowings from rest of the world.




... Answer is D)



20.Assertion (A): Lending abroad is recorded in the debit side of current account. Reason (R): Lending affects the assets and liabilities of the economy as there is outflow of income.




... Answer is A)

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