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Arrange the following components as per the sample of Balance of Payments for India.

(A) Trade Balance.

(B) Net Invisibles.

(C) Current Account Balance.

(D) Errors and Omissions.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 1

Option 1: (A), (B), (C), (D) -> In the standard format of India's Balance of Payments, components are arranged in a logical sequence: First comes the Trade Balance (exports minus imports of goods), followed by Net Invisibles (services, income, and transfers). These two components together constitute the Current Account Balance (Trade Balance + Net Invisibles). Finally, Errors and Omissions appears as a balancing item to account for statistical discrepancies in recording international transactions. This hierarchical arrangement reflects how broader aggregates (Current Account) are derived from their constituent parts (Trade Balance and Net Invisibles). -> correct

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