Question

Give two examples of items to be recorded on the credit side of the balance of payments.

Answer 1

1. Exports of Goods and Services:
   • Example: India exports machinery to Germany.
   • This is documented as a credit entry since it introduces foreign currency into the nation.
2. Foreign Investment in the Country:
   • Example: A U.S. company invests in an Indian software firm.
   • Since this is a capital inflow, it is noted as a credit.