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Question
Distinguish between an autonomous transaction and accommodating transactions of the balance of payments account.
Solution
| Autonomous transactions | Accommodating transactions |
| Autonomous transactions are independent of the state of balance of payments account (BOP A/c). | Accommodating transactions are undertaken to maintain the balance in BOP account. |
| These transactions take place on both current and capital accounts. | These transactions take place only on the capital account. |
| These items in BOP refer to foreign exchange transactions which are made independently of the state of the balance of payment, such as profit motive. | These items in BOP refer to the transaction which is undertaken to cover a deficit or surplus in autonomous transactions. |
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