In the Balance of Payments, an increase in foreign exchange reserves appears under which category?
Capital Account – Debit
In the Balance of Payments, transactions in assets and liabilities are recorded in the Capital Account, while trade in goods, services and income is recorded in the Current Account. Foreign exchange reserves are a financial asset, so any change in them is a capital-account entry.
By convention, an increase in a country's holdings of foreign assets, including a build-up of foreign exchange reserves, is recorded as a debit, because the country is acquiring (paying out for) an external asset, in the same way importing goods is a debit.
Therefore an increase in foreign exchange reserves is entered as a debit item in the Capital Account, not as a credit and not in the Current Account.
Hence, an increase in foreign exchange reserves appears under Capital Account – Debit.
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1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct Investments?
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I. Make an application to open a Demat Account and Online Trading Account.
II. Allocate funds from the bank account to the trading account.
III. Once the order is confirmed, it is placed in the stock exchange through the online trading system.
What is the idea that a country should be self-sufficient and not participate in international trade called?
According to Harrod-Domar growth model for the full capacity use of capital and labour or for full employment it is necessary that
When the exchange rate changes from 1$ = Rs. 72 to 1$ = Rs. 68, then the:
A. Rupee has depreciated
B. Dollar has depreciated
C. Rupee has appreciated
D. Dollar has appreciated
Choose the correct answer from the options given below:
