IAI Actuarial Core Principles · Business Economics · Balance of payments and exchange rates
Which item is included in the reserve assets component of a country's balance of payments, rather than in the current account?
Changes in the central bank's holdings of foreign currency and gold are recorded as reserve assets in the financial side of the balance of payments. Remittances, dividends, service exports and aid grants are all current account items.
- ARemittances sent home by Indian workers abroad
- BChanges in the central bank's holdings of foreign currency and goldCorrect
- CDividends paid to foreign shareholders
- DReceipts from software service exports
- Foreign aid grants received
Explanation
Reserve assets are the central bank's official holdings of foreign currency, gold and similar assets, and changes in them are recorded in the financial account. Remittances, dividends, service exports and grants are current account items.
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