Match List-I with List-II
| List-I | List-II | ||
| (A) | Capital Account | (I) | Difference between the value of exports and imports of goods |
| (B) | Balance of Trade (BOT) | (II) | Handles conversion issues and ensure stability in international transactions. |
| (C) | Current Account | (III) | Records all international transactions of assets. |
| (D) | International monetary system | (IV) | Records of trade in goods and services and transfer payments. |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A) - (III), (B) - (I), (C) - (IV), (D) - (II)
A country deals with the rest of the world in two ways: it buys and sells goods and services, and it buys and sells assets. The balance of payments records the first in the current account and the second in the capital account, and the international monetary system makes payments between currencies possible.
(A) Capital Account — this matches (III) Records all international transactions of assets. Purchases and sales of assets such as money, stocks, bonds and government debt with other countries are recorded here.
(B) Balance of Trade (BOT) — this matches (I) Difference between the value of exports and imports of goods. BOT covers goods alone; the balance on services and transfers is shown separately as net invisibles.
(C) Current Account — this matches (IV) Records of trade in goods and services and transfer payments. Trade in goods, trade in services and transfers such as gifts, remittances and grants make up the current account.
(D) International monetary system — this matches (II) Handles conversion issues and ensure stability in international transactions. A currency is accepted abroad only if it can be converted freely and at a dependable price; the international monetary system was set up to handle these issues.
NCERT (2025-26): “…In the past, governments have tried to gain confidence of potential users by announcing that the national currency will be freely convertible at a fixed price into another asset. Also, the issuing authority will have no control over the value of that asset into which the currency can be converted. This other asset most often has been gold, or other national currencies. There are two aspects of this commitment that has affected its credibility — the ability to convert freely in unlimited amounts and the price at which this conversion takes place. The international monetary system has been set up to handle these issues and ensure stability in international transactions.… 6.1.1 Current Account Current Account is the record of trade in goods and services and transfer payments. …… …Balance of Trade (BOT) is the difference between the value of exports and value of imports of goods of a country in a given period of time.… 6.1.2 Capital Account Capital Account records all international transactions of assets. An asset is any one of the forms in which wealth can be held, for example: money, stocks, bonds, Government debt, etc.…” |