Assertion (A): Accommodating transactions are called ‘above the line’ items in the balance of payments.
Reason (R): Accommodating transactions are determined by the gap in the balance of payments.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) is false but (R) is true.
Assertion (A): Accommodating transactions are called ‘above the line’ items in the balance of payments. — False. Accommodating items are below the line. Autonomous items are above the line.
Reason (R): Accommodating transactions are determined by the gap in the balance of payments. — True. They are made to cover a deficit or surplus.
NCERT (2026-27): “Autonomous and Accommodating Transactions … 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. …” |