Get Started
Start Free Mocks
CUETMOCK

Ace Your

CUET Preparation Today

Start Free Mocks
Home Questions V29VQ23AG8
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

Read the following statements - Assertion (A) and Reason (R):
Assertion (A): Recovery of loans from rest of the world is recorded on the credit side of the current account.
Reason (R): Recovery of loans affects the assets of the country.
From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Assertion (A) is true but Reason (R) is false.

Assertion (A) is false but Reason (R) is true.

Correct Answer:

Assertion (A) is false but Reason (R) is true.

Explanation:

The correct answer is Option 4: Assertion (A) is false but Reason (R) is true.

 

  • Assertion (A): Recovery of loans from the rest of the world is recorded on the credit side of the capital account, not the current account. The current account typically records transactions related to goods, services, income, and current transfers.

  • Reason (R): Recovery of loans indeed affect the assets of the country. When a country recovers a loan, it increases its financial assets and improves its financial position.

 

CUET Questions