Q. With reference to the Balance on Current Account in the Balance of Payments (BoP), consider the following statements:
1.A Current Account surplus implies that a country is a net lender to the rest of the world.
2.Balance on Current Account comprises only the trade in goods, i.e., exports and imports.
3.A Current Account deficit occurs when the payments on the current account exceed the receipts.
Which of the statements given above is/are correct?
Answer: B
Notes:
Explanation:
- A surplus on the current account indicates that the country’s receipts exceed its payments, making it a net lender to other countries.
- The Current Account includes both trade in goods (balance of trade) and invisibles (like services, income, and transfers), not just goods.
- A Current Account deficit means payments are more than receipts — the country is a net borrower.
Source: Economy (NCERT)
