Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A) : Transfers from Abroad (remittances) are to be recorded on the credit side of capital account of Balance of Payments (BoP).
Reason (R) : All the transactions that lead to inflow of foreign currency from the rest of the world are recorded on the credit side of Balance of Payments (BoP).
Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A) : Transfers from Abroad (remittances) are to be recorded on the credit side of capital account of Balance of Payments (BoP).
Reason (R) : All the transactions that lead to inflow of foreign currency from the rest of the world are recorded on the credit side of Balance of Payments (BoP).
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 D
Solution and Explanation
Transfers from abroad (remittances) are unilateral transfers. They are recorded in the current account, not in the capital account.
Remittances bring in foreign currency, so they sit on the credit side, but of the current account. So (A) is false.
Step 2: Check Reason (R):
Every transaction that brings foreign currency into India is a credit entry in the BoP. Every one that sends it out is a debit entry.
So (R) is true.
Step 3: Choose the option:
(A) is false and (R) is true. This is option (D).
Options (A) and (B) need a true (A). Option (C) needs a true (A) and a false (R). None of them fits.
Final Answer:
Assertion false, Reason true. Option (D).
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