Match the items of List-I with List-II and indicate the code of correct matching : Codes :List – I List – II a. Accommodating capital flow i. Creation of international reserve assets by the IMF and their allocation among member countries in order to improve international liquidity. b. Autonomous capital flow ii. Estimate of foreign exchange flow on account of either variations in the collection of related figures or unrecorded illegal transactions of foreign exchange. c. SDR Allocation iii. Inflow of foreign exchange to meet the balance of payments deficit, normally from the IMF. d. Statistical discrepancy iv. Flow of loans/investments in normal course of business.
Matching Economic Concepts: List I and List II
This question requires matching specific economic terms from List I with their corresponding definitions or descriptions in List II. The correct matching helps understand key concepts in international finance and economics.
Analysis of List I Items:
- a. Accommodating capital flow: These are capital flows that finance a balance of payments deficit. Option (iii) accurately describes this as an inflow to meet a deficit, often involving international institutions like the IMF.
- b. Autonomous capital flow: These are market-driven capital flows based on profit motives, like investments or loans, occurring in the normal course of business. Option (iv) fits this definition.
- c. SDR Allocation: Special Drawing Rights (SDRs) are international reserve assets created by the IMF. Option (i) directly defines the creation and allocation of SDRs to improve international liquidity.
- d. Statistical discrepancy: In economic accounts, this refers to errors and omissions, often resulting from unrecorded transactions or data collection issues. Option (ii) correctly identifies it as an estimate related to variations or unrecorded transactions.
Correct Matching:
Based on the analysis:
- a. Accommodating capital flow matches with (iii) Inflow of foreign exchange to meet the balance of payments deficit, normally from the IMF.
- b. Autonomous capital flow matches with (iv) Flow of loans/investments in normal course of business.
- c. SDR Allocation matches with (i) Creation of international reserve assets by the IMF and their allocation among member countries in order to improve international liquidity.
- d. Statistical discrepancy matches with (ii) Estimate of foreign exchange flow on account of either variations in the collection of related figures or unrecorded illegal transactions of foreign exchange.
Final Code Determination:
The correct matching combination is a-iii, b-iv, c-i, d-ii. This corresponds to Option B.
Important Questions from Balance of payments (BOP)
The Balance of Payment Account of an economy is related to the ________.
Which of the following statements is INCORRECT?
Balance of Trade is measured as:
Indicate the correct code of the following statements being correct or incorrect. The statements relate to the type of transactions recorded in the current/capital accounts of the Balance of Payments.
Statement (I): The capital account consists of long-term capital transactions only.
Statement (II): The current account includes all transactions which give rise to or use up national income.
The items on the capital account of Balance of Payments are:
