Gifts, remittances and grants in current account are the components of?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Transfer Payments.
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Gifts, remittances, and grants are one-sided transactions — meaning something of value is transferred without any quid pro quo (no good or service is exchanged in return).
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Such transactions are recorded in the Current Account of the Balance of Payments (BoP) under the heading “Current Transfers” or “Transfer Payments.”