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Question
Give the meanings of 'autonomous' transactions and 'accommodating' transactions in the Balance of Payments Accounts.
Solution
An autonomous item in the balance of payment refers to international economic transactions when transactions are made independently of the state of the balance of payment, such as profit motive. An accommodating item in the balance of payment refers to international economic transactions when transactions are not made with the profit motive such as government financing. While deficit or surplus in the balance of payment occurs because of autonomous items, the accommodating items are meant to restore the balance of payment identity. Balance of payment always balances because of accommodating items.
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