Macro

Balance of Payments

Medium

Which of the following best defines 'Unilateral Transfers' in the context of international transactions?

Funds transferred internationally as loans for a specified tenure and interest rate.

Trade transactions involving goods and services between two countries.

Payments made by one party without expecting any return in the future.

Investments made by a country in the stock market of another country.

✅ Correct Option: 3

Option 1 -> Describes international loans with expected repayment and interest, not unilateral transfers.

Option 2 -> Refers to bilateral trade involving exchange of goods and services, not one-way transfers.

Option 3 -> Correctly defines unilateral transfers as one-sided payments without expectation of return.

Option 4 -> Describes foreign portfolio investments which expect returns, not unilateral transfers.

Hence, Option 3: Payments made by one party without expecting any return in the future -> Unilateral transfers are one-sided transactions recorded in the current account of Balance of Payments. They include remittances from workers abroad, foreign aid, gifts, grants, and donations where the donor does not expect any goods, services, or repayment in return. These are pure transfers of purchasing power from one country to another without any quid pro quo arrangement. -> correct

2023: 29 May Shift 2

People demand foreign exchange because:

2025: 27 May Shift 2

If we have to pay Rs 150 for 3 pounds, then the exchange rate is Rs........... per pound.

2025: 31 May Shift 1

The Reserve Bank sells foreign exchange when there is a deficit. This move of RBI is known by which of the following?

Official reserve sale.
Balance of payments deficit.
Balance of payments surplus.
Balance of trade.

2025: 28 May Shift 1

Official reserve sale refers to

The reserve bank sells foreign exchange when there is a deficit.
The International Monetary Fund sells foreign exchange when there is a deficit.
Net consequences of autonomous transactions.
The agreement in which national currencies are traded for one another.

2022: 19 July Shift 2

Indian Real Estate Company receives rent from Microsoft from London. This transaction will be recorded in __________ Account.

2025: 26 May Shift 2

Other things remaining same, if the income abroad increases, what is the likely effect of the same on national income of the domestic economy?

Which of the following best defines 'Unilateral Transfers' in the context of international transactions?

Solution

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