Class 12 Economics – Balance of Payments

Chapter Overview

The Balance of Payments records all economic transactions between a country and the rest of the world over a period, through a double‑entry system. It comprises the Current Account (goods, services, incomes, unilateral transfers) and Capital & Financial Account (capital flows, foreign assets), with errors & omissions and reserve adjustments ensuring balance. :contentReference[oaicite:0]{index=0}

Important Keywords

• Current Account: Records trade in goods & services, factor income, and unilateral transfers. :contentReference[oaicite:1]{index=1}
• Capital Account: Records capital transfers and non-financial asset transactions. :contentReference[oaicite:2]{index=2}
• Financial Account: Tracks FDI, portfolio flows, banking capital, reserve assets. :contentReference[oaicite:3]{index=3}
• Balance of Trade: Net exports minus imports of goods. :contentReference[oaicite:4]{index=4}
• Autonomous Items: Voluntary economic flows driven by profit motives. :contentReference[oaicite:5]{index=5}
• Accommodating Items: Reserve adjustments or IMF borrowings made to correct BoP imbalances. :contentReference[oaicite:6]{index=6}
• Errors & Omissions: Statistical balancing entry to ensure BoP accounts balance. :contentReference[oaicite:7]{index=7}