| Assertion [A] Capital of balance of payment is non-recurring in nature. |
| Reason [R] Capital transfers affects the assets and liabilities of a country. |
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: B
Solution :
Capital account of BoP is comprised of items which are not regular sources i.e., non-recurring in nature, though it impacts the assets and liabilities of the country.
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