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As per the Reserve… (Class 12 Economics SQP 2023-24, Q4)

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EconomicsCBSE Class 12 · Sample paper, session 2023-24 · 1 mark · MCQ

CBSE Class 12 Economics sample paper 2023-24: question 4

From the official CBSE sample question paper for 2023-24, section A, question 4, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q4 · 1 mark · MCQCompetency-basedOpen Economy Macroeconomics

As per the Reserve Bank of India (RBI) press report, dated 29th December, 2022:
"Net external commercial borrowings to India recorded an outflow of US$ 0.4 billion in the second quarter (2022-23)"
The above transaction will be recorded in the _______ account on ______ side of Balance of payments account of India. (Choose the correct alternative to fill up the blanks)

  1. (A)current, credit
  2. (B)current, debit
  3. (C)capital, credit
  4. (D)capital, debit

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Is borrowing a current or capital account item?

Hint 2

Does an outflow bring in or send out foreign exchange?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. External commercial borrowings are loans, so they belong to the capital account.

  2. A net outflow means more was repaid or lent out than received, so foreign exchange goes out: a debit entry. Option (D).

    1 mark

Answer: (D) capital, debit

Where the marks are

  • Net ECB outflow: capital account, debit side (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Open Economy Macroeconomics, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.