Read the following statements – Assertion (A) and Reason (R) carefully.
Assertion (A): Shipping service provided by an Indian company to foreign companies will be recorded in the current account of Balance of Payments (BOP).
Reason (R): Current account of Balance of Payments (BOP) does not alter the status of the asset or liabilities of the residents of India.
Assertion (A): Shipping service provided by an Indian company to foreign companies will be recorded in the current account of Balance of Payments (BOP).
Reason (R): Current account of Balance of Payments (BOP) does not alter the status of the asset or liabilities of the residents of India.
Show Hint
- Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- Assertion (A) is true, but Reason (R) is false.
- Assertion (A) is false, but Reason (R) is true.
The Correct Option is A
Solution and Explanation
The Balance of Payments (BOP) is a systematic record of all economic transactions between the residents of a country and the rest of the world in a given time period. The BOP is divided mainly into two accounts: the current account and the capital account.
Explanation of Assertion (A): The current account records all transactions related to trade in goods and services, income, and current transfers. When an Indian shipping company provides services to foreign companies, it earns income from services exported. This transaction is recorded as an invisible export in the current account because it involves export of services.
Hence, Assertion (A) is true.
Explanation of Reason (R): The current account only records income and expenditure flows. It does not deal with transactions that involve a change in the ownership of assets or liabilities — these are recorded in the capital and financial accounts. Since service trade does not result in any asset or liability creation, Reason (R) is also true and correctly explains Assertion (A).
Thus, both statements are correct and Reason is the correct explanation of the Assertion.
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 Rate Questions
- Read the following statements—Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Ceteris Paribus, Devaluation of domestic currency leads to an increase in National Income of a nation.
Reason (R): Devaluation of domestic currency refers to reduction in the value of domestic currency with respect to foreign currency, under the fixed exchange rate system.
- Identify, which of the following is not a source of demand for foreign exchange for the Indian economy? (Choose the correct alternative.)
- Under the ________ Exchange Rate System, the Central Bank can control the rise/fall of foreign exchange rate in a range-bound manner. (Fill up the blank with the correct alternative.)
- Market forces of demand and supply, actively interact under ........... exchange rate system to determine the foreign exchange rate. (Choose the correct option to fill in the blank)
- Under the ............ Exchange Rate System, the Central Bank can control the foreign exchange rate in a range bound manner.
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