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Read the following statements: Assertion (A) and Reason (R). Choose the correct option from those given below: Assertion…

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Read the following statements: Assertion (A) and Reason (R).
Choose the correct option from those given below:

Assertion (A): Unilateral transfers are recorded in the Current Account of the Balance of Payments (BoP) of a nation.

Reason (R): Capital account records transactions which cause a change in the assets or liabilities of the country.

a

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

b

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

c

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

d

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

✓ Correct answer: b)

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

Explanation

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

Explanation:
  • Unilateral transfers such as gifts and remittances are included in the Current Account because they are one-sided transfers.
  • Capital account records transactions involving foreign assets and liabilities.
  • However, Reason (R) does not explain why unilateral transfers are included in the current account.
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