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Balance of Payments · Question 19 of 53

Question 19

MediumOriginal question

Assertion (A): Remittances from Indians abroad are a capital account item.
Reason (R): Remittances are transfers that create no claim to be repaid.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

R is true: a remittance is a one-way transfer.
Because they create no asset or liability, remittances go in the current account, so A is false.

Concept: Where remittances go
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe current account

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Ten questions from Balance of Payments, at your own pace.

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