Consider the following statements A Balance of Payments represent a better picture of a country 39 s...........

Economic Affairs Balance of Payments

Consider the following statements

A. Balance of Payments represent a better picture of a country's economic transactions with the rest of the world than the 'Balance of trade'

R. 'Balance of Payments' takes into account the exchange of both visible and invisible items whereas 'Balance of Trade' does not.

Both A and R are true and R is the correct explanation of A.

Both A and R are true and R is not the correct explanation of A.

A is true R is false

A is false R is true

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Explanation:

Both the statements are correct.

The balance of payments, also known as balance of international payments, encompasses all transactions between a country’s residents and its nonresidents involving goods, services and income; financial claims on and liabilities to the rest of the world; and transfers such as gifts. The balance of payments classifies these transactions in two accounts – the current account and the capital account. The current account includes transactions in goods, services, investment income and current transfers, while the capital account mainly includes transactions in financial instruments. An economy’s balance of payments transactions and international investment position (IIP) together constitute its set of international accounts.