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CUET Economics 2025 PYQs29 May Shift 2. Free, no login required.

Macro

past year questions, CUET Economics 2025 29 May Shift 2

Balance of Payments

past year questions, Macro, CUET Economics 2025 29 May Shift 2

Medium

In the balance of payments, the transactions of bonds and equity shares are placed under which of the following account?

Solution

✅ Correct Option: 2

Option 1 -> Trading Account is used in business accounting for calculating gross profit, not a component of balance of payments.

Option 2 -> Financial Account records all transactions involving financial assets like bonds, equity shares, foreign direct investment, and portfolio investment.

Option 3 -> Current Account records trade in goods and services, income receipts and payments, and unilateral transfers, not capital flows.

Option 4 -> Errors and Omissions is a balancing item to account for statistical discrepancies, not for recording specific transactions.

Hence, Option 2: Financial Account -> The Financial Account is a component of the balance of payments that records all international transactions involving financial assets and liabilities. Bonds and equity shares are financial instruments, and their cross-border purchases and sales are classified as portfolio investments within the Financial Account. This account captures capital flows between countries, including foreign direct investment, portfolio investment (stocks and bonds), and other investment flows. -> correct

Related questions:

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Foreign exchange reserves are ample, means?

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  2. Anticipated demand for foreign goods and services can be met through incumbent foreign exchange reserve.
  3. Supply of foreign reserves is more than demand of foreign reserves.
  4. Government is confident about present and future need of foreign reserve.

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The headline inflation rate is largely under control, although the inflation rate for some specific food items is elevated.

In the above statement, what is meant by control?

  1. Within the range of the acceptable inflation rate.
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  3. Price of items for daily consumption are growing in such a manner that they are manageable through implementing policy tools if need arises.
  4. No price rise has been witnessed.

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Match List-I with List-II :

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In a fixed exchange rate system, when the government increases the value of foreign currency, this change is called:

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Which of the following transactions will be recorded in the current account of Balance of Payment?

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Raising the value of country's currency under fixed exchange rate system is :

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