Meaning :
Meaning BOP is a systematic record of transaction between the resident of a country and the rest of the world. It depicts the income & expenditure of country during a particular year.
Trade Balance:
Trade Balance It consists of the import and export of goods only
Invisible Trade:
Invisible Trade It consists of income & exp. On services. Gifts unilateral transfers or charities are also included in this.
Capital Account:
Capital Account Includes short & long term buying of securities A Foreign country may buy securities or invest directly.
BOP Always Balance:
BOP Always Balance Statement is based on double entry book keeping system The Cr. Side represents the sources from which foreign exchange was acquired and Dr. side states the various uses to which foreign exchange was put.
Causes of Adverse BOP:
Causes of Adverse BOP Development Programme Income Effect Demographic Effect Demonstration Effect
Methods to Rectify:
Methods to Rectify Deflation Exchange depreciation Devaluation Pegging Operation Restrictions Change in interests rates Tariffs & Quotas Exports Promotion Measures