Consider the following statements about Export of cotton Textiles i It is shown in the deb...........

Economics (CUET) Balance of Payments

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Consider the following statements about Export of cotton Textiles.

i. It is shown in the debit side of the current account.

ii. It reduces the balance of payment deficit.

iii. It is shown in the credit side of the current account.

Which of the following statements are true?

iii only

i and ii

ii and iii

None of these

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Explanation:

Option (1) is correct.
Explanation: Current account is that account of BoP, which records exports and imports of visible and invisible items and unilateral transfers. A major part of transactions in foreign trade is in the form of export and import of goods (visible items). Payment for import of goods is written on the negative side (debit items) and receipt from exports is shown on the positive side (credit items). Balance of these visible exports and imports is known as balance of trade (or trade balance). Export of cation textile leads to inflow of foreign exchange thus, recorded as credit item.