With reference to the Balance of Payments BoP consider the following statements The BoP will be robu...........

Economic Affairs Balance of Payments

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With reference to the Balance of Payments (BoP), consider the following statements

The BoP will be robust due to a decline in exports and an increase in imports.
The country's BoP is used as a gauge to show whether the value of its currency is appreciating or depreciating.

Select the correct statement.

1 only

2 only

Both

None

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Explanation:

Balance of Payment (BoP) of a country can be defined as a systematic statement of all economic transactions of a country with the rest of the world during a specific period usually one year.

The BoP is going to be strong on the back of significant improvement in exports and a fall in imports.
Balance of Payment (BoP) can be used as an indicator to determine whether the country’s currency value is appreciating or depreciating.
For preparing BoP accounts, economic transactions between a country and the rest of the world are grouped under, Current account, Capital account and Errors and Omissions. It also shows changes in Foreign Exchange Reserves.

Hence only statement 2nd is correct.