InterviewSolution
Saved Bookmarks
InterviewSolution
| 1. |
State the components of (a) current account, and (b) capital account of BOP |
|
Answer» The current account consists of visible trade (export and import of goods), invisible trade (export and import of services), unilateral transfers, and investment income (income from factors such as land or foreign shares). The credit and debit of foreign exchange from these transactions is also recorded in the balance of current account. The resulting balance of the current account is approximated as the sum total of balance of trade. The components of the capital account include foreign investment and loans, banking and other forms of capital, as well as monetary movements or changes in the foreign exchange reserve. The capital account flow reflects factors such as commercial borrowings, banking, investments, loans, and capital. |
|