When autonomous receipts are less than autonomous payments. The balance of payments is in:
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Shift 11/06/2023 3:30 PM - 6:30 PM
Correct Answer
Detailed Explanation
The reason for this is that the balance of payments is a record of all economic transactions between a country and the rest of the world. It is divided into two main components: the current account and the capital and financial account.
- Autonomous receipts refer to the inflow of funds into the country that is not influenced by economic policies, such as exports, foreign investments, and tourism revenue.
2. Autonomous payments refer to the outflow of funds from the country, including imports, foreign debt payments, and payments for foreign services.
3. If autonomous receipts are less than autonomous payments, it means that the country is spending more on imports and other foreign obligations than it is earning from exports and other sources. This results in a deficit in the current account of the balance of payments.
In summary, a deficit occurs when a country is making more payments to the rest of the world than it is receiving in receipts, leading to a negative balance in the balance of payments.
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