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Question

(a) The balance of visible trade is 4000 crores and the balance of invisible trade is 25,000 crores. If the value of imports of services is 7000 crores, what will be the value of export of services?

(b) State the following true or false:

(i) Accommodating items are undertaken in order to balance the BOP account.

(ii) Foreign exchange received on account of textile will be recorded on the capital account of BOP.

(iii) Autonomous items are also known as " Below the line items''.


Solution

(a) Balance of invisibles = Export of services - Import of services

25000= X-7,000

Export of services =Rs 32,000 crores

(b) (i) True. Autonomous items lead to disequilibrium and accommodating items balance the BOP.

     (ii) False, it will be recorded in the current account of BOP.

     (iii) False, these are known as above the line items as these are undertaken before deficit or surplus in the BOP.


Economics

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