Question

Assertion (A): Import of machinery is reflected in the current account of balance of payments.

Reason (R): Export and import of goods and invisibles are recorded in current account of balance of payments.

Options

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

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

• Assertion (A) is true and Reason (R) is false.

• Both Assertion (A) and Reason (R) are false.

Answer 1

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).

Explanation:

The import of machinery is an import of goods and is therefore recorded in the current account. The Reason correctly explains the Assertion by stating that goods and invisibles form part of the current account.