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Open Economy Macroeconomics
Question
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Export and import of machines recorded in capital account of BOP account. True or false? Give reasons. 

Answer

True/False. The statement is false because export and import of all goods including machines are recorded in current account.
Note: There is third category (besides current account and capital account) called official reserve account which records transactions of central bank in BOP statement. These transactions are called accommodating or ‘beloiv the line’ transactions. It relates to running down of its reserves of foreign exchange by selling foreign currency in foreign exchange market in case of deficit. The decrease (or increase) in official reserves is called the overall balance of payments deficit (or surplus).

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Some More Questions From Open Economy Macroeconomics Chapter

Balance of payment always balances. Comment.

When does a situation of deficit/surplus in BOP arise?
or
Explain meaning of deficit in BOP.

Distinguish between BOT and BOP. 

Distinguish between current account and capital account of BOP account. Mention any two transactions (components) of each.

State any four items of current account of BOP account.

Distinction between Balance on trade account and Balance on current account

What does a deficit in current account of BOP indicate?

State any four components (items) of capital account of BOP account.

Export and import of machines recorded in capital account of BOP account. True or false? Give reasons. 

What are Autonomous and Accommodating transactions in BOP account? Give an example of each. 
or
Excess of foreign exchange receipts over foreign exchange payments on account of accommodating transactions equal deficit in BOP. True or false? Give reasons.