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The correct answer is Direct investment receipt – Credit in the capital account. Key Points The balance of payments (BOP) is the record of any pa
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Which of the following pairs is correctly matched with regard to balance of payment accounts ?
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JKSSB Finance Sub-Inspector Official Paper 2 (Held On : 1 April 2021 Shift 1)
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Direct investment receipt – Credit in the capital account
Receipts of transfer payments – Debit in the current account
Portfolio investment payments- credit in the current account
Export of services – Debit in the current account.
Answer (Detailed Solution Below)
Option 1 : Direct investment receipt – Credit in the capital account
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The correct answer is Direct investment receipt – Credit in the capital account.Key Points
The balance of payments (BOP) is the record of any payment or receipt between one nation and its nationals with any other country.
The current account, the capital account, and the financial account make up a country's BOP.
Together, these three accounts tell a story about the state of an economy, its economic outlook, and its strategies for achieving its desired goals.
A current account records the flow of goods and services in and out of a country, including tangible goods, service fees, tourism receipts, and money sent directly to other countries either as aid or sent to families.
A financial account measures the increase or decrease in international ownership assets that a country is associated with, while a capital account measures the capital expenditures and overall income of a country.
A country's capital account refers to any and all international capital transfers.
The overall expenditures and income are measured by the inflow and outflow of funds in the form of investments and loans flowing in and out of the economy. Hence, the Direct investment receipt is credited into the capital account.
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Which one of the following pairs is not correctly matched with regard to balance of payments accounts?
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Which one of the following pairs is not correctly matched with regard to balance of payments accounts?A
Import of goods and services - Debit in the current accountB
Receipts of transfer payment - Credit in the current accountC
Direct investment receipt - Credit in the capital accountD
Portfolio investment payments - Debit in the current account
Hard Open in App Solution Verified by Toppr
Correct option is D)
The balance of payments account for one country records all the payments that effect funds transfers between that nation and the rest of the world. Payments from foreigners to the domestic country are credited to the account. These include all foreign payments for exports, payments from foreign tourists for services, investment income made by the domestic country in foreign markets, unilateral transfers and capital inflows.
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[Solved] Which of the following pairs is not correctly matched with regard to balance of payment accounts?
Which of the following pairs is not correctly matched with regard to balance of payment accounts?
A. Import of goods and services – Debit in the current account
B. Receipts of transfer payments – Credit in the current account
C. Direct investment receipt – Credit in the capital account
D. Portfolio investment payments – Debit in the current account
Answer» D. Portfolio investment payments – Debit in the current account
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