Match List-I with List-II.
| List-I | List-II | ||
| (A) | Export of goods and services | (I) | Excess of export of goods over import of goods |
| (B) | Trade surplus | (II) | An element of invisible item |
| (C) | Current transfers to rest of the world | (III) | Recorded in credit side the current account BOP |
| (D) | Portfolio investment | (IV) | Foreign institutional investment |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A)-(III), (B)-(I), (C)-(II), (D)-(IV)
The current account of the BoP records trade in goods and services and transfer payments. The capital account records transactions in assets, such as foreign investment.
| List-I | List-II | Reason |
|---|---|---|
| (A) Export of goods and services | (III) Recorded in credit side the current account BOP | Exports bring foreign exchange into the country, so they are entered as a credit item in the current account. |
| (B) Trade surplus | (I) Excess of export of goods over import of goods | A trade surplus arises when a country exports more goods than it imports. |
| (C) Current transfers to rest of the world | (II) An element of invisible item | Invisibles include services, transfers and flows of income between countries. |
| (D) Portfolio investment | (IV) Foreign institutional investment | Foreign institutional investors, such as mutual funds and pension funds, buy shares and bonds. This is portfolio investment, a capital account item. |
NCERT (2026-27): “Balance on Current Account … Balance of Trade (BOT) is the difference between the value of exports and value of imports of goods of a country in a given period of time. Export of goods is entered as a credit item in BOT, whereas import of goods is entered as a debit item in BOT. It is also known as Trade Balance. BOT is said to be in balance when exports of goods are equal to the imports of goods. Surplus BOT or Trade surplus will arise if country exports more goods than what it imports. Whereas, Deficit BOT or Trade deficit will arise if a country imports more goods than what it exports. Net Invisibles is the difference between the value of exports and value of imports of invisibles of a country in a given period of time. Invisibles include services, transfers and flows of income that take place between different countries.…”
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