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Question
Read the following statements carefully and choose the correct alternatives given below:
Statement 1: Current account records exports and imports of visible and invisible items only.
Statement 2: The balance of the current account is the difference between the sum of credit items and the sum of debit items on the current account.
Options
Both the statements are true.
Both the statements are false.
Statement 1 is true and Statement 2 is false.
Statement 2 is true and Statement 1 is false.
Solution
Statement 2 is true and Statement 1 is false.
Explanation:
The current account is the BoP account that records exports and imports of visible and invisible goods, as well as unilateral transfers. The current account balance is the difference between the sum of credit and debit items entered into the account.
