Consider the following statements regarding Balance of Payment BoP 1 BoP comprises current account c...........

Economic Affairs Balance of Payments

Consider the following statements regarding Balance of Payment (BoP):

1. BoP comprises current account, capital account, errors and omissions, and change in foreign exchange reserves.

2. The current account records exports and imports in goods and services and foreign investment.

3. The capital account records all international purchases and sales of assets such as loans, banking capital, transfer payments, etc.

Which of the above statement/s is/are correct?

2 and 3 only

3 Only

1 Only

All of the above

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Explanation:

Fist statement is correct. The balance of payments (BOP), also known as balance of international payments, summarizes all transactions that a country's individuals, companies and government bodies complete with individuals, companies and government bodies outside the country.
Second statement is incorrect. The current account records a nation's transactions with the rest of the world – specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments – over a defined period of time, such as a year or a quarter.
Third statement is incorrect. A capital account shows the net change in physical or financial asset ownership for a nation and, together with the current account, constitutes a nation's balance of payments. The capital account includes foreign direct investment (FDI), portfolio and other investments, plus changes in the reserve account.