Question
Explain the distinction between autonomous and accommodating' transactions in balance of payments. Also explain the concept of balance of payments 'deficit' in this context.
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Answer
Autonomous Transactions: Are independent of all other transactions in the BOP. These transactions are not influenced by the foreign exchange position of the country. Exports, imports, etc are some examples.
Accommodating Transactions: Are undertaken to cover deficit or surplus in the autonomous transactions. Therefore, their magnitude is determined by the autonomous transactions.
Deficit in BOP is determined only by the autonomous transactions. When autonomous foreign exchange payments exceed autonomous foreign exchange receipts, the excess is called BOP deficit.
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$(a)$ Services rendered by the housewives
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| Particulars | $(Rs$ .in Crore$)$ |
| Net current transfers to abroad | $(-) 5$ |
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| Consumption of fixed capital | $30$ |
| Rent | $40$ |
| Indirect tax | $20$ |
| Indirect tax | $100$ |
| Royalty | $10$ |
| Compensation of employees | $600$ |
| Subsidy | $5$ |
| Net factor income from abroad | $(-)25$ |
Assuming that 'increase' in investment is Rs. 900 crore and marginal propensity to consume is 0.6, explain the working of multiplier.
Calculate (a) net domestic product at factor cost and (b) gross national disposable income:
→| Rs. in crores | ||
| (i) | Private final consumption expenditure | $8000$ |
| (ii) | Government final consumption expenditure | $1000$ |
| (iii) | Exports | $70$ |
| (iv) | Imports | $120$ |
| (v) | Consumption of fixed capital | $60$ |
| (vi) | Gross domestic fixed capital formation | $500$ |
| (vii) | Change in stock | $100$ |
| (viii) | Factor income to abroad | $40$ |
| (ix) | Factor income from abroad | $90$ |
| (x) | Indirect taxes | $700$ |
| (xii) | Net current transfers to abroad | $(–) 30$ |
Calculate:
→- National Income; an.
- Consumption of fixed capital.
|
S. No
|
Particulars
|
(₹) In Crose
|
|
1.
|
Private final consumption expenditure.
|
$210$
|
|
2.
|
Gross domestic product at market price $(GDP_{MP})$.
|
$320$
|
|
3.
|
Wages and salaries.
|
$170$
|
|
4.
|
Employer's contribution to provident fund.
|
$10$
|
|
5.
|
Interest.
|
$20$
|
|
6.
|
Indirect taxes.
|
$30$
|
|
7.
|
Subsidies.
|
$5$
|
|
8.
|
Rent.
|
$10$
|
|
9.
|
Profit.
|
$45$
|
|
10
|
Royalty.
|
$15$
|
|
11.
|
Net factor income from abroad (NFIA).
|
$3$
|