Q.Explain the components of the Current Account and the Capital Account of the Balance of Payments.

The balance of payments consists of both the current account and the capital account, so the answer is (d).

The Balance of Payments (BoP) is a systematic record of all economic transactions between residents of a country and the rest of the world during a year. It has two main components:

• Current Account — trade in goods (visible) and services (invisible), plus income and current transfers.
• Capital Account — flows of capital such as foreign investment, loans and changes in reserves.

Since BoP includes both, options (a) and (b) alone are incomplete, and (c) Receipts and Payments Account is not a BoP component. The correct answer covers both accounts.

A balance of payments surplus occurs when a country's foreign receipts exceed its foreign payments, i.e. exports are greater than imports; so the answer is exports more than imports.

The balance of payments (BoP) records all economic transactions between a country and the rest of the world over a period.

• Surplus — receipts (mainly from exports) exceed payments (mainly for imports); the country earns more from abroad than it spends.
• Deficit — payments exceed receipts (imports more than exports).
• Equilibrium — receipts equal payments.

Since a surplus means the country receives more than it pays, it indicates that exports are more than imports.

The statement recording transactions between residents of one country and foreign countries is the Balance of Payment, so the correct option is (b).

The balance of trade and balance of payments chapter in the Tamil Nadu HSC Commerce syllabus distinguishes between these two records.

• The Balance of Payment (BoP) is a systematic record of all economic transactions (visible goods, invisible services, and capital transactions) between the residents of a country and the residents of the rest of the world during a period.

• The Balance of Trade records only the visible imports and exports of goods, so it is narrower and option (d) is wrong.

• "Statement of receipts and payments" and "accounting statement" are not the correct terms here.