Please explain the solution.....I din get it .Thanks
Dear student
There are two types of transactions with reference to BOP - autonomous transactions and accommodating transactions. Autonomous transactions refers to those economic transactions that are undertaken with the objective of profit. On the other hand, accommodating transactions are those transactions that are not undertaken with the objective of profit, rather, to correct any disequilibrium on account of autonomous transactions. In other words, accommodating transactions are undertaken with the objective to compensate for any deficit or surplus in the autonomous transactions.
The overall deficit or surplus in the BOP is judged on the basis of autonomous transactions. The BOP is said to be in a deficit if the autonomous receipts are less than autonomous payments. On the other hand, the BOP will show a surplus if the autonomous receipts are more than autonomous payments.
Regrads
There are two types of transactions with reference to BOP - autonomous transactions and accommodating transactions. Autonomous transactions refers to those economic transactions that are undertaken with the objective of profit. On the other hand, accommodating transactions are those transactions that are not undertaken with the objective of profit, rather, to correct any disequilibrium on account of autonomous transactions. In other words, accommodating transactions are undertaken with the objective to compensate for any deficit or surplus in the autonomous transactions.
The overall deficit or surplus in the BOP is judged on the basis of autonomous transactions. The BOP is said to be in a deficit if the autonomous receipts are less than autonomous payments. On the other hand, the BOP will show a surplus if the autonomous receipts are more than autonomous payments.
Regrads