Question

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. $\left(a\right)-\left(i\right),\left(b\right)-\left(iii\right),\left(c\right)-\left(ii\right),\left(d\right)-\left(iv\right)$
• B. $\left(a\right)-\left(iv\right),\left(b\right)-\left(i\right),\left(c\right)-\left(ii\right),\left(d\right)-\left(iii\right)$
• C. $\left(a\right)-\left(iv\right),\left(b\right)-\left(i\right),\left(c\right)-\left(iii\right),\left(d\right)-\left(ii\right)$
• D. $\left(a\right)-\left(iii\right),\left(b\right)-\left(ii\right),\left(c\right)-\left(i\right),\left(d\right)-\left(iv\right)$

Answer 1

Answer: (C)

$\left(a\right)-\left(iv\right),\left(b\right)-\left(i\right),\left(c\right)-\left(iii\right),\left(d\right)-\left(ii\right)$

A-4 The balance of the current account = Balance of trade + Balance of invisible + balance of transfers

B-1

The balance of the capital account refers to the balance of capital transfers - borrowing and lending from abroad and sales and purchase of assets, such as gold and foreign exchange from other countries.

C-3

repatriation is a unilateral payment as there is only one party actively involved in the transaction.

D-2

The official statement account contains the foreign reserves held by the central bank of the country. This is extremely important if the country wishes to maintain a fixed or managed float currency.