Question

Assertion (A): External Assistance is recorded in the Current Account of the Balance of Payments of a nation.

Reason (R): External Assistance includes bilateral and multilateral loans received/extended by a nation.

पर्याय

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Assertion (A) is false, but Reason (R) is true.

Explanation:

'External assistance' refers to bilateral and multilateral loans that a country gets or provides to other countries; thus, the reason is true. However, these loans indicate capital inflows or outflows rather than routine income or expenditure on commodities and services. As a result, they are recorded in the Balance of Payments’ Capital Account rather than the Current Account, which covers trade in commodities, services, income, and transfers. Therefore, the assertion is false.