Question
Explain with imaginary example the concept of Balance of Payments.
| Balance of payment | ||||
| Income $($credit$)$ in Rs. Expenditure $($debit$)$ in Rs. Balance | ||||
| Current A/c | ||||
| Export of goods. Balance of trade Export of services Income on capital | $500\ 1000\ 800$ | Import of goods. Balance of trade Import of services Payment of capital | $700\ 1200\ 1000$ | $-200\ -200\ -200$ |
| One sided income | $700$ | One sided payment | $600$ | $+100$ |
| Sub Total | $3000$ | $3500$ | ||
| Balance of current Account | $-500$ | |||
| Capital Account | ||||
| Long term debt Short term debit Sale of Gold | $500\ 1000\ 500$ | Long term Lending Short term Lending Purchase of Gold | $300\ 800\ 390$ | |
| Sub Total | $2000$ | $1490$ | ||
| Error in calculation | $10$ | |||
| Total Credit | $5000$ | |||
| Balance of Payment | $0$ | |||
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