Giving reasons state whether the following statements are true or false:
Giving reasons state whether the following statements are true or false:
(i) Excess of foreign exchange receipts over foreign exchange Payments on account of accommodating transactions equals deficit in Balance of Payments.
(ii) Export and Import of machines are recorded in Capital Account of the Balance of Payments Account.
2 Answers
(i) False. As Accommodating Transactions remove both surplus ar-rd deficit of Balance of Payments Account.
(ii) False. As export and import of machines are recorded in Current Account of Balance of Payments Account.
(i) False. As Current Account of Balance of Payments Account also records unilateral transfers.
(ii) True. As all kind of foreign investments (Foreign Direct Investments and Port Folio Investments) are included in the Capital Account of Balance of Payments.