Which of the following transactions item is a debit/ credit in the current account of Balance of payment? Give reasons for your answer.
- Exports of merchandise.
- Imports of services.
- Lending to the rest of the world.
- A gift from foreigners.
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- Exports of merchandise is a credit item in the current account of Bop, because it is source of income for the country.
- Imports of services is a debit item in the current account of Bop, because it is a source of payment from the country to R.O.W.
- Lending to the R.O.W. is debit item in the current account of BoP it represents outflow of funds.
- A gift from foreigners is a private transfer and also a credit item in the current account of BoP.
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