Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

An Indian real estate company receives rent from Brampton Ltd. in Toronto. Where will this transaction be recorded in the BoP account?

Options:

In the credit side of current account

In the credit side of capital account

In the debit side of current account

In the debit side of capital account

Correct Answer:

In the credit side of current account

Explanation:

As, there is inflow of foreign currency in the form of rent, it would be on the credit side of the account. Now, the question is whether it will be in the capital account or current account. Capital account records all the transaction which affects the assets and liabilities of the countries. Whereas, current account records all the transactions of good and services and which are recurring in nature.