Question

______ constitute the third element in the BoP which is the 'balancing item'.

Options

• Capital account

• Current account

• Errors and Omissions

• None of these

Answer 1

Errors and Omissions constitute the third element in the BoP which is the 'balancing item'.

Explanation:

Apart from the current and capital accounts, the 'balancing item' in the BoP is errors and omissions, which represent our inability to accurately record all overseas transactions.