Question:medium
Distinguish between autonomous transactions and accommodating transactions in
the Balance of Payments of the economy.
Distinguish between autonomous transactions and accommodating transactions in
the Balance of Payments of the economy.
Updated On: Jan 14, 2026
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Solution and Explanation
- Autonomous Transactions:
These transactions are driven by economic conditions or external influences and do not necessitate adjustments in the Balance of Payments. They are also referred to as independent transactions. Illustrations include exports, imports, foreign investment, and loans.
- Accommodating Transactions:
These transactions are undertaken to achieve equilibrium in the Balance of Payments. They encompass borrowing from foreign nations or utilizing reserves. Their purpose is to offset the imbalances created by autonomous transactions.
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