NCERT Solutions for Class 12 Macro Economics Chapter 6 Balance of Payments

Q. Why are imports entered as negative items in the balance of payments account?

Ans. Imports lead to an outflow of foreign exchange in the country. Thus, they are recorded as negative (debit) items.

Q. Where is 'borrowings from abroad' recorded in the Balance of Payments Accounts? Give reasons.

  • Ans. (a) Borrowing from abroad is a part of Capital Account.
  • (b) Borrowing from abroad can be private transactions or official transactions.
  • (c) For example,
  • 1. All transactions relating to borrowings from abroad by private sector are recorded on the positive (credit) side as it is inflow of foreign currency.
  • 2. Similarly, transactions relating to borrowings from abroad by government sector are recorded on the positive (credit) side as it is inflow of foreign currency.