The Balance of Payment Account of an economy is related to the ________.

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SSC CGL 2022 Tier-I Official Paper (Held On : 06 Dec 2022 Shift 3)
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  1. agriculture sector
  2. external sector
  3. government sector
  4. private sector

Answer (Detailed Solution Below)

Option 2 : external sector
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PYST 1: SSC CGL - English (Held On : 11 April 2022 Shift 1)
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Detailed Solution

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The correct answer is external sector.Key Points

  • The balance of payments summarizes an economy's international economic dealings. 
  • These transactions consist of transfer payments as well as the export and import of products, services, and financial assets (like foreign aid).
  • The current account, the capital account, and the financial account are the three primary subcategories of the BOP.
  • The influx and outflow of goods and services into a nation are represented by the current account.
  • All overseas capital transfers are noted in the capital account.
  • International monetary flows associated with investments in companies, properties, bonds, and stocks are recorded in the financial account.
  • The BOP should be 0 when the current account is in balance with the total of the capital and finance accounts, but this rarely happens.

Additional Information

  • The balance of payments deficit is the shortfall when autonomous foreign exchange payments exceed autonomous foreign exchange receipts.
  • Foreign exchange transactions that are done independently of the state's balance of payments and for a person's own benefit are referred to as autonomous transactions.

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