Read the following statements - Assertion (A) and Reason (R):
Assertion (A): External assistance is recorded in the capital account of the Balance of Payments.
Reason (R): External assistance is an inflow in the Balance of Payment Account.
From the given alternatives choose the correct one:
Assertion (A): External assistance is recorded in the capital account of the Balance of Payments.
Reason (R): External assistance is an inflow in the Balance of Payment Account.
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 2
The capital account of Balance of Payments records all international purchases and sales of assets such as money, stocks, bonds, etc. It includes foreign investments and loans. External assistance comes under the borrowing raised from foreign countries and financial institutions.