| Assertion [A] A country always tries to balance the BoP, i.e. balance in current account equals to balance in capital account. |
| Reason [R] Balanced BoP indicates stable economic relation with rest of the world. |
A) Both Assertion [A] and Reason [R] are true and Reason [R] is the correct explanation of Assertion [A]
B) Both Assertion [A] and Reason [R] are true, but Reason [R] is not the correct explanation of Assertion [A]
C) Assertion [A] is true, but Reason [R] is false
D) Assertion [A] is false, but Reason [R] is true
Correct Answer: A
Solution :
Balancing BoP means bringing it to the state of equilibrium by the way of inflow or outflow of currency in accommodating items. This ensures a stable economic condition in the economy.
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