Components of Balance of Payments | Current Account | Capital Account | Dr. Sahil Roy скачать в хорошем качестве

Components of Balance of Payments | Current Account | Capital Account | Dr. Sahil Roy

Components of Balance of Payments Current Account Capital Account Dr. Sahil Roy Balance of Payments is generally grouped under the following Heads i) Current Account ii) Capital Account iii) Unilateral Payments Account iv) Official Settlement Account. Current Account “The Current Account includes all transactions which give rise to or use up national income.” The Current Account consists of two major items, namely: i) Merchandise exports and imports, and ii) Invisible exports and imports. Merchandise exports, i.e., the sale of goods abroad, are credit entries because all transactions giving rise to monetary claims on foreigners represent credits. On the other hand, merchandise imports, i.e., purchase of goods from abroad, are debit entries because all transactions giving rise to foreign money claims on the home country represent debits. Merchandise imports and exports form the most important international transaction of most of the countries. Invisible exports, i.e., sales of services, are credit entries and invisible imports, i.e. purchases of services, are debit entries. Important invisible exports include the sale abroad of such services as transport, insurance, etc., foreign tourist expenditure abroad and income paid on loans and investments (by foreigners) in the home country form the important invisible entries on the debit side. Capital Account The Capital Account consists of short- terms and long-term capital transactions A capital outflow represents a debit and a capital inflow represents a credit. For instance, if an American firm invests Rs.100 million in India, this transaction will be represented as a debit in the US balance of payments and a credit in the balance of payments of India. The payment of interest on loans and dividend payments are recorded in the Current Account, since they are really payments for the services of capital. As has already been mentioned above, the interest paid on loans given by foreigners of dividend on foreign investments in the home country are debits for the home country, while, on the other hand, the interest received on loans given abroad and dividends on investments abroad are credits. Unilateral Transfers Account Unilateral transfers is another terms for gifts. These unilateral transfers include private remittances, government grants, disaster relief, etc. Unilateral payments received from abroad are credits and those made abroad are debits. Official Settlements Accounts Official reserves represent the holdings by the government or official agencies of the means of payment that are generally accepted for the settlement of international claims. Balance of Payments Items Purpose of BOP o Provides data for economic analysis o Reveals changes in the composition & magnitude of foreign trade o Provides indications of future repercussions of country’s past trade performances o Reveals the weak and strong points of a country’s foreign trade relations Terminologies o Favorable Balance Of Payments – Value of total receipts more than total payments o Adverse Balance Of Payments – Value of total receipts less than total payments o Balanced Balance Of Payments – Value of total receipts equals total payments o Unrequited receipts – Receipts for which nothing has to be paid in return. o Unrequited payments – Payments for which nothing is received in return. Greetings of the day plz join our Telegram group https://t.me/joinchat/zP4E5O4imRtjNGY1 I am Sahil Roy and I welcome you to my YouTube Channel Dr. Sahil Roy MCQ FOR B.COM AND M.COM ENTRANCE TEST    • B.COM & M.COM ENTRANCE MCQ   VIDEOS ON MONEY AND BANKING    • Money & Banking   VIDEOS ON INSURANCE    • Insurance & Risk Management   VIDEOS ON RESEARCH METHODOLOGY    • Плейлист   MANAGEMENT    • MANAGEMENT CLASS XII   MICROECONOMICS    • ECONOMICS FOR UGC NTA NET EXAM   ACCOUNTANCY CLASS XI    • ACCOUNTANCY CLASS XI   NTA NET/JRF    • NTA NET COMMERCE MCQ   MACROECONOMICS    • Economic Class XII   ACCOUNTANCY CLASS XII    • ACCOUNTANCY CLASS XII   #drsahilroy #commerce #au