The correct answer is: Both (A) and (R) are correct and (R) is the right explanation of (A).
The balance of payments is a systematic record of all economic transactions between the residents of a country and the rest of the world. It includes all payments and receipts for goods, services, income, and capital.
The balance of payments is divided into two main accounts: the current account and the capital account. The current account records all payments and receipts for goods, services, and income. The capital account records all payments and receipts for capital transfers.
The balance of payments is always in balance, but the two accounts can be in surplus or deficit. A current account surplus means that a country is exporting more goods and services than it is importing. A current account deficit means that a country is importing more goods and services than it is exporting.
A capital account surplus means that a country is receiving more capital from abroad than it is investing abroad. A capital account deficit means that a country is investing more abroad than it is receiving from abroad.
The balance of payments is an important tool for understanding a country’s economic health. It can be used to track a country’s trade performance, investment flows, and financial position.
The following is a brief explanation of each option:
- Option A: Both (A) and (R) are correct and (R) is the right explanation of (A). This is the correct answer. The balance of payments is a systematic record of all economic transactions between the residents of a country and the rest of the world, and it includes all payments and receipts for goods, services, income, and capital.
- Option B: Both (A) and (R) are correct, but (R) is not the right explanation of (A). This is not the correct answer. The balance of payments is a systematic record of all economic transactions between the residents of a country and the rest of the world, and it includes all payments and receipts for goods, services, income, and capital. Therefore, (R) is the right explanation of (A).
- Option C: (R) is correct, but (A) is not correct. This is not the correct answer. The balance of payments is a systematic record of all economic transactions between the residents of a country and the rest of the world, and it includes all payments and receipts for goods, services, income, and capital. Therefore, (A) is correct.
- Option D: Both (A) and (R) are incorrect. This is not the correct answer. The balance of payments is a systematic record of all economic transactions between the residents of a country and the rest of the world, and it includes all payments and receipts for goods, services, income, and capital. Therefore, (A) is correct.