Assertion (A): Balance of Payments represents a better Picture of a country economic transactions with the rest of the world than the Balance of
Assertion (A): Balance of Payments represents a better Picture of a country economic transactions with the rest of the world than the Balance of Trade Balance of Payments takes into account
Reason (R): the exchange of both visible and invisible items whereas balance of Trade does not.
Codes:
(a) Both ‘A’ and ‘R’, are individually true and ‘R’ is the correct explanation of ‘A’.
(b) Both ‘A’ and ‘R’ are individually true but ‘R’ is not the, correct explanation of ‘A’ .
(c) ‘A’ is true but ‘R’ is false. (d) ‘A’ is false but ‘R’ is true.
1 Answers
(a) Balance of payments of a nation consists of visible account, invisible account and capital account. Whereas balance of trade = Export of goods – import of goods. If a country imports are more than exports the deficit can be made up by invisibles like remmitance by NRI and FDI investment.