Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

Which of the following options will be recorded on the "Credit side" of the BoP account?

  • Loan from IMF to cover the deficit in BoP account
  • Purchase of shares of Reliance by a Britisher
  • Export of coffee to South Africa
  • Import of machines from China
Options:

1 and 2

2 and 3

1, 2 and 3

1, 2, 3 and 4

Correct Answer:

1, 2 and 3

Explanation:

All the transactions which results in inflow of currency is recorded in the credit side of the account whereas, all the transactions which results in outflow of currency is recorded in the debit side of the account. Thus, option 1, 2 and 3 results in inflow of the currency, whereas, option 4 i.e. imports of machinery from China would result in outflow of currency in the form of payments.