Question

Read the following statements: Assertion and Reason (R). Choose the correct option from those given below:
Assertion : Unilateral Transfers are recorded in the Current Account of the Balance of Payments (BoP) of a nation.
Reason (R): Capital account records transactions which cause a change in the assets or liabilities of the country.

• A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is true, but Reason (R) is false.
• D. Assertion (A) is false, but Reason (R) is true.

Hint:

Unilateral transfers are recorded in the Current Account, while the Capital Account deals with investments, loans, and changes in assets and liabilities.

Answer 1

The Correct Option is B

Step 1: Understanding Assertion (A).
Unilateral transfers refer to one-way transfers of money or goods, such as remittances or foreign aid, which are recorded in the Current Account of the Balance of Payments.
Step 2: Understanding Reason (R).
The capital account records transactions that involve changes in the country's assets or liabilities, such as foreign investments or loans, which is unrelated to unilateral transfers.
Step 3: Conclusion.
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation for Assertion (A) because unilateral transfers do not relate to the capital account. Final Answer:} Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).