Assertion: Export and Import of goods (visible items) and Export and Import of services (invisible items) will be recorded in the current account of BOP.

Reason: These transactions do affect assets and liabilities of the parties involved.

[0.80 marks]

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

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Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

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Assertion (A) is true but Reason (R) is false.

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Assertion (A) is true but Reason (R) is false.

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Solution

The correct option is C Assertion (A) is true but Reason (R) is false.
Current Account is a part of BOP which records:
(a) Export and Import of goods (visible items)
(b) Export and Import of services (invisible items)
(c) Unilateral transfers to and from rest of the world
(d) Factor incomes to and from abroad
These transactions do not affect assets and liabilities of the parties involved.

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Similar questions

(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''.

Q.
From the following given sets of statements in column I and II, choose the correct pair of statements.

	Column I		Column II
A	BOT records imports of visible items only.	i	BOT is a part of Current Account.
B	Transactions recorded in BOT are recurring in nature.	ii	There can be surplus or deficit in BOT.
C	Current A/c is also a part of BOP records export and import of tangible goods.	iii	All transactions of Current A/c are also recurring in nature.
D	There can be surplus only in Current A/c.	iv	Current A/c also records unilateral transfers and factor incomes.

[0.80 marks]

Q. Current account of Balance of Payments account records only exports and imports of goods and services.

Q. Identify the following items as visible or invisible:
(a) Export of jute; (b) Export of software services.

Q. Match the items of List-I items in List-II and select a correct code:

List-I	List-II
(a) Current Account	(i) Official Capital
(b) Capital Account	(ii) Reserves from foreign countries
(c) Unilateral Payments	(iii) Reparations
(d) Official Statement Account	(iv) Visible and invisible exports and imports

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Assertion: Export and Import of goods (visible items) and Export and Import of services (invisible items) will be recorded in the current account of BOP. Reason: These transactions do affect assets and liabilities of the parties involved. [0.80 marks]

Assertion: Export and Import of goods (visible items) and Export and Import of services (invisible items) will be recorded in the current account of BOP.

Reason: These transactions do affect assets and liabilities of the parties involved.

[0.80 marks]