Define balance of payment or BOP
Balance of payment: It is a systematic record of each and every economic transaction of a country with the rest of world in an accounting year.
In a completely employed economy, the higher the yield of capital goods, and the bigger its: (1) Present living standards. (2) Present output of consumer goods. (3) Growth of capacity for the future production. (4) Rates of inflation and unemployment.
Managed floating exchange rate: This is a system in which the central bank or Government permits the exchange rate to identify market forces although they take decisions to intervene whenever they feel it suitable.
China is a huge manufacturer of technology of telephone devices. It has lately become a member of W.T.O. that means it can sell its products in other member countries such as India. Assume that it does export a big number of telephone instruments to India:
Assume that many people are willing and capable to pay greater than production costs for certain goods however pervasive shortages exist. International agreements or domestic laws and policy are most likely key factors if we consider sustained scarcities in ma
Determine the factors accountable for inflow of foreign currency? Answer: a) Foreigners buying home country services and goods via exports. b) Foreigners investment in home country via joint ventures and via
Which transactions- autonomous or accommodating carry balance in BOP? Answer: Accommodating transactions carry balance in the BOP or balance of payment.
Calculate the value of imports, if the net imports are of Rs 160 crores and the value of exports are of Rs 400 crores.
Components of capital account of balance of payment: A) Borrowing and lending to and from abroad.B) Change in foreign exchange reserves C) Investment to and from abroad.
Managed floating rate system: This is a system in which foreign exchange rate is found out by market forces and central bank is a key contributor to stabilize the currency in condition of tremendous appreciation or depreciation.
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