Read the passage carefully and answer the questions based on the passage:

Autonomous and Accommodating Transactions

International economic transactions are called autonomous 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 BOP. One reason could be to earn profit. These items are called 'above the line' items in the BOP. The balance of payments is said to be in surplus (deficit) if autonomous receipts are greater (less) than autonomous payments.

Accommodating transactions (termed 'below the line' items), on the other hand, are determined by the gap in the balance of payments, that is, whether there is a deficit or surplus in the balance of payments. In other words, they are determined by the net consequences of the autonomous transactions. Since the official reserve transactions are made to bridge the gap in the BoP, they are seen as the accommodating item in the BOP.

Which of the following is incorrect about accommodating transactions of the BoP?

They are independent of the state of BOP.

The correct answer is Option (3) → They are independent of the state of BOP.

Accommodating transactions are not independent of the state of the Balance of Payments (BoP); rather, they are undertaken to correct disequilibrium — that is, to bridge the gap between receipts and payments when there is a deficit or surplus. In contrast, autonomous transactions are independent of the BoP situation and occur due to factors like trade or investment motives. Hence, Option (C) is incorrect about accommodating transactions.