Q. With reference to India’s external sector, consider the following statements:
1.The Current Account records transactions such as exports, imports, interest payments, and remittances.
2.Unlike the Current Account, the Capital Account may show a surplus or deficit depending on capital inflows and outflows.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- The Current Account captures current transactions such as exports, imports, remittances, and interest payments, and can show a surplus or deficit.
- The Capital Account records capital transactions (like FDI, external borrowing, etc.), but it does not show a surplus or deficit as the Current Account does. It is treated as a balancing entry in the overall balance of payments.
Source- TMH Indian Economy by Ramesh Singh
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