Current account surplus in balance of payments occurs when the export of visibles is greater than import of visibles. State true or false, and explain.

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Solution

False. Current account balance depends on:

(i) export and import of visibles, and

(ii) export and import of invisibles.

Excess of export of visibles over and above import of visibles would lead to current account surplus BoP only if the balance on invisibles is zero.

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Find the balance on the balance of payments account. Is the overall balance of payments balanced?

$\begin{matrix} Items & (Rs in lakhs) (i) Capital account balance & (-) 400 (ii) Value of imports & 150 (iii) Value of exports & 450 (iv) Unilateral transfers & 100 (v) Balance of visible trade & 200 \end{matrix}$

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

If the value of visible exports exceeds the value of visible imports, the balance relates to:

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

(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''.

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Current account surplus in balance of payments occurs when the export of visibles is greater than import of visibles. State true or false, and explain.

False. Current account balance depends on: (i) export and import of visibles, and (ii) export and import of invisibles. Excess of export of visibles over and above import of visibles would lead to current account surplus BoP only if the balance on invisibles is zero.

False. Current account balance depends on:

(i) export and import of visibles, and

(ii) export and import of invisibles.

Excess of export of visibles over and above import of visibles would lead to current account surplus BoP only if the balance on invisibles is zero.