Autonomous and accommodating transaction
Balance of Payments The Balance of Payment (Bo P) of a country is a systematic record of all economic transactions between its residents and residents of foreign countries. Classification of Economic Transactions in Bo P (i) Visible items (physical goods) (ii) Invisible items (services) (iii) Capital transfers (capital receipts and payments) (iv) Uni-lateral transactions 3.Balance of Trade The difference between export and import of goods, i.e.Autonomous transactions are present in both current and capital account of Bo P, While accommodating transactions are present only in capital account of Bo P.Accommodating items, also termed as ‘below the line items’, are those items of Bo P that are not determined by considerations of profit but to restore identity of Bo P.(ii) False, export and import of machine, it will be recorded in current account as it is a producer good exported. State whether the following statements are true or false. (i) Difference between value of exports and imports of goods and services are called Balance of Trade. Components of current account are as follows: (i) Export and import of goods (visible items).(ii) External assistance is not recorded in Balance of Payments account. (i) False, because Balance of Trade only records the export and import of visible items, i.e. (ii) False, because external assistance are included in the current account of Balance of Payments as unilateral receipts.. List the items of the current account of Balance of Payments account. (ii) Export and import of services (invisible items). Balance of Trade Balance of Payment The Balance of Payment (Bo P) of a country is a systematic record of all economic transactions between its residents and residents of foreign countries.
Bo P Deficit = Receipts on account of autonomous transactions Where, R = Receipts P = Payments .What is the meaning of deficit in Balance of Payments?(Delhi 2014,2010) or How is Balance of Payment ‘deficit’ measured? When the payments of a country on account of autonomous transactions exceed the receipts of the country on account of autonomous transactions, this difference is termed as Bo P deficit.Deficit in Bo P = Receipts on account of autonomous transactions 6.
Distinguish between autonomous and accommodating transactions of Balance of Payments account. Autonomous items, also termed as ‘above the line items’, are those items, which are related to transactions which are determined by considerations of profit (economic motive) and hence, was no concern with the state of Bo P.
(i) Excess of foreign exchange receipts over foreign exchange payments on account of accommodating transactions equals deficit in the Balance of Payments.