Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

International economic transactions are called.......... when transactions are made due to some reason other than to bridge the gap in the balance of payments, that is, when they are independent of the state of balance of payments.

Options:

Errors and omissions.

Accommodating transactions.

Autonomous transactions.

Official reserve sale.

Correct Answer:

Autonomous transactions.

Explanation:

The correct answer is Option (3) → Autonomous transactions.

Autonomous transactions are international economic transactions that are undertaken for economic reasons such as profit, investment, or trade, and are not intended to correct any imbalance in the balance of payments. They occur independently of the balance of payments situation.

Option (1) → Errors and omissions. This refers to statistical discrepancies in the balance of payments accounting, not actual economic transactions.

Option (2) → Accommodating transactions. These are undertaken to bridge the gap in the balance of payments (such as borrowing or drawing from foreign exchange reserves). They are dependent on the balance of payments situation.

Option (4) → Official reserve sale. This is a type of accommodating transaction, where the central bank sells foreign currency reserves to correct a deficit in the balance of payments.