Consider the following statements: Statement I: In the external sector, the Current Account of a country records all current transactions in foreign currency, such as exports, imports, interest payments, remittances, and transfers. Statement II: These transactions are recorded as either inflows (credits) or outflows (debits), and the resulting balance can be either a surplus or a deficit. In the context of the above statements, which of the following is correct? |ForumIAS

[A] Both Statement I and Statement II are correct, and Statement II is the correct explanation of Statement I

[B] Both Statement I and Statement II are correct, but Statement II is not the correct explanation of Statement I

[C] Statement I is correct, but Statement II is incorrect

[D] Statement I is incorrect, but Statement II is correct

Answer: A

Notes:

Explanation:

Statement I correctly defines the Current Account in the external sector as a record of foreign currency transactions like exports, imports, remittances, interest, and transfers.
Statement II accurately explains how these transactions are recorded (credit/debit), and how they result in either a surplus or deficit, which directly supports Statement I.

Source: Indian Economy (Ramesh Singh)