Consider the following statements about India rsquo s Balance of Payments BoP 1 BoP records all econ...........

Economic Affairs Balance of Payments

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Consider the following statements about India’s Balance of Payments (BoP)

1.BoP records all economic transactions between residents of a country and rest of the world.

2.Capital account balance comprises the balance of trade of goods and services, factor incomes, and net cash transfers.

3.Current account balance reflects net change in ownership of national assets.

Which of the statements given above is/are correct?

1 only

1 and 3 only

2 and 3 only

2 only

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Explanation:

1 only

BoP records all economic transactions between residents of a country and the rest of the world.

This statement is correct. The Balance of Payments (BoP) accounts for all economic transactions between residents (individuals, businesses, and government entities) of a country and the rest of the world over a specific period, typically a year.

Capital account balance comprises the balance of trade of goods and services, factor incomes, and net cash transfers.

This statement is not correct. The capital account balance does include various elements, such as foreign direct investment, portfolio investment, loans, and banking capital, but it does not directly include the balance of trade of goods and services, which is part of the current account balance.

Current account balance reflects the net change in ownership of national assets.

This statement is incorrect. The current account balance represents the net transactions in goods, services, primary income, and secondary income (transfers) between a country and the rest of the world over a specified period. It does not directly reflect the change in ownership of national assets.

Therefore, only statement 1 is correct