1.

Distinguish: between autonomous transactions and accommodating transactions of balance of payments account.

Answer»

The difference between autonomous and accommodating transactions is tabulated below :

Autonomous TransactionsAccommodating Transactions
These are transactions which are undertaken for economic motive i.e. profit.These are transactions which are not undertaken for economic motive.
These transactions are called above the line items in BOP.These transactions are called below the line items in BOP
The balance of these transactions governs the overall BOP balance.These transactions are balancing in nature, i.e. they correct the disequilibrium in autonomous items.
If the autonomous receipts are less than payments, then it shows deficit balance in BOP and vice-versaIf there is deficit balance in BOB then government-rundown its reserve in the form of accommodating the transaction to cover the deficit in autonomous transactions.


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