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Home Questions 7VWREPJR2F
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

Read the following statements -
Assertion (A) and Reason (R): Assertion (A) International economic transactions are called autonomous when they are independent of the state of BoP.
Reason(R) Autonomous Transactions occur with the objective of earning profit.
From the given alternatives choose the correct one:

Options:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

c) Assertion (A) is true but Reason (R) is false.

d) Assertion (A) is false but Reason (R) is true.

Correct Answer:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Explanation:

The transactions in BOP are divided into 2 categories: 

  • Autonomous transactions
  • Accommodating transactions

Autonomous transactions are the one done with the motive of earning profit and are independent to the condition of BOP statement. Whereas, accommodating transactions are done with the motive of balancing the BOP statement.

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