Differentiate between Current Account and Capital Account of Balance of Payments (BoP).
Differentiate between Current Account and Capital Account of Balance of Payments (BoP).
Show Hint
Solution and Explanation
The balance of payments (BoP) records the dealings of a country with the rest of the world over a year. It has two main accounts, the current account and the capital account. We must tell how they differ.
Step 2: Current account:
The current account records trade in goods and services. It also records transfer payments to and from abroad.
It includes exports and imports of goods and services. It includes gifts, remittances and grants sent or received from abroad.
Step 3: Capital account:
The capital account records international transactions in assets. It includes investments made from abroad and by residents abroad. It also includes borrowing and lending to or from other countries.
Step 4: The difference in a table:
| Basis | Current Account | Capital Account |
|---|---|---|
| What it records | Trade in goods, services and transfer payments | Transactions in assets such as investment, borrowing and lending |
| Examples | Exports, imports, gifts, remittances, grants | Foreign investment, loans taken and given |
Final Answer:
The current account records trade in goods and services and transfer payments. The capital account records international transactions in assets such as investment, borrowing and lending.
Top CBSE CLASS XII Economics Questions
___________ farming is a system that is helpful in restoring, maintaining and enhancing the ecological balance.
(Choose the correct alternative to fill in the blank):The present day rapid industrial growth in China can be traced back to the economic reforms introduced in 1978, where ________ .
(Choose the correct alternative to fill in the blank):
(i) Initially reforms were initiated in agriculture, foreign trade and investment sectors.
(ii) The policy of dual pricing was adopted.
(iii) The Government revoked the policy of Special Economic Zones.Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): In the recent past, Indian economy has been facing the problem of jobless growth.
Reason (R): Jobless growth refers to a situation where an economy is able to produce more goods and services without generating additional employment.Read the following statements carefully:
Statement 1: India, Pakistan, and China have similar physical endowments but totally different political systems.
Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.Read the following statements carefully:
Statement 1: India, Pakistan and China have similar physical endowments, but totally different political systems.
Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.
Top CBSE CLASS XII Foreign exchange market Questions
- Identify, which of the following is not a source of demand for foreign exchange.
- Read the following statements carefully:
Statement 1: The price of a given currency in terms of another is known as bank rate.
Statement 2: Demand curve for foreign exchange is a downward sloping curve. - Read the following statements carefully:
Statement 1: Under the flexible exchange rate system, a deficit or surplus in the Balance of Payments is automatically corrected.
Statement 2: Under the flexible exchange rate system, there is always a possibility of over/under valuation of currency.
In the light of the above given statements, choose the correct option from the following: - Read the following statements – Assertion and Reason (R). Choose the correct option from those given below: Assertion : Increase in exchange rate implies that the price of foreign currency in terms of domestic currency has increased. Reason (R): Balance of trade records the inflows and outflows of goods.
- Explain the likely impact of implementation of “Exports Promotion Scheme” of Government of India on the Balance of Payment (BoP) of the country. (Keeping other factors constant)
State the meaning of Trade Surplus.
Top CBSE CLASS XII Questions
- 2, b, c are in A.P. and the range of determinant $\begin{vmatrix}1&1&1\\ 2&b&c\\ 4&b^{2}&c^{2}\end{vmatrix}$ is [2, 16]. Then find range of c is
- A boy of mass 50 kg is standing at one end of a, boat of length 9 m and mass 400 kg. He runs to the other, end. The distance through which the centre of mass of the boat boy system moves is
- A capillary tube of radius r is dipped inside a large vessel of water. The mass of water raised above water level is M. If the radius of capillary is doubled, the mass of water inside capillary will be
- A circular disc is rotating about its own axis. An external opposing torque 0.02 Nm is applied on the disc by which it comes rest in 5 seconds. The initial angular momentum of disc is
- A circular disc is rotating about its own axis at uniform angular velocity \(\omega.\) The disc is subjected to uniform angular retardation by which its angular velocity is decreased to \(\frac {\omega}{2}\) during 120 rotations. The number of rotations further made by it before coming to rest is