When transactions are made due to some reason other than to bridge the gap in the balance of payments, that is, when they are independent of the state of BoP then such international economic transactions are called as…………
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Autonomous
Countries trade, invest and lend abroad for their own reasons, mostly for profit, without regard to the state of the balance of payments. Transactions made in this way, for reasons other than bridging the gap in the balance of payments, are called autonomous. Balance of payments transactions are grouped by this reason:
Autonomous transactions are called ‘above the line’ items, and the BoP is said to be in surplus or deficit according to them.
Transactions made to cover the gap left by the autonomous ones are accommodating.
Why the other options are incorrect
Option (2) Endogenous — Incorrect. There is no such class of balance of payments transactions.
Option (3) Accommodating — Incorrect. Accommodating transactions are the opposite case: they are made in order to bridge the gap in the balance of payments, as the official reserve transactions are, and are called ‘below the line’ items.
Option (4) Fictitious — Incorrect. There is no such class of balance of payments transactions.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 15-05 S1* 21-05 S1 | 22-05 S1* | – | 31-05 S3* | – |
* A similar question.
NCERT (2025-26): “Autonomous and Accommodating Transactions … International economic transactions are called autonomous when transactions are made due to some reason other than to bridge the gap in the balance of payments, that is, when they are independent of the state of BoP. One reason could be to earn profit. These items are called ‘above the line’ items in the BoP. The balance of payments is said to be in surplus (deficit) if autonomous receipts are greater (less) than autonomous payments. Accommodating transactions (termed ‘below the line’ items), on the other hand, are determined by the gap in the balance of payments, that is, whether there is a deficit or surplus in the balance of payments. In other words, they are determined by the net consequences of the autonomous transactions. Since the official reserve transactions are made to bridge the gap in the BoP, they are seen as the accommodating item in the BoP (all others being autonomous).” |