Q. With reference to the Balance of Payments (BoP), consider the following statements:
1.The Current Account records transactions related to trade in goods, services, and unilateral transfers.
2.Import of goods leads to an increase in domestic demand for goods and services in the country.
3.Remittances sent by citizens living abroad are considered transfer payments in the Current Account.
Which of the statements given above is/are correct?
Answer: C
Notes:
Explanation:
- The Current Account includes trade in goods and services and unilateral transfers (like remittances, gifts, and grants).
- Imports represent expenditure to foreign countries and reduce the domestic demand for goods and services as money flows out.
- Remittances from abroad are unilateral transfers and are part of the Current Account under transfer payments.
Source: Economy (NCERT)
