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Open Economy Macroeconomics — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsOpen Economy Macroeconomics4 Marks
Question
Distinguish:
  1. Between current account and capital account.
  2. Between autonomous transactions and accommodating transactions of balance of payments account.
✓

Answer

  1. Current account records exports and imports of goods and services and transfer payments whereas capital account records borrowings and lending to and from abroad, investments to and from abroad and changes in foreign exchange reserves.
  2. Transactions made independent of the state of balance of payments are called autonomous transaction whereas transactions made on account of the state of balance of payments are called accommodating transactions.

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