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Assertion (A): Balance of Payments represents a better picture of a country’s economic transactions with the rest of the world than the Balance of Trade.

Assertion (A): Balance of Payments represents a better picture of a country’s economic transactions with the rest of the world than the Balance of Trade.
Reason (R): Balance of Payments takes into account the exchange of both visible and invisible items whereas Balance of Trade does not.

(a)

Both A and R are individually true and R is the correct explanation of A

(b)

Both A and R are individually true and R is not the correct explanation of A

(c)

A is true but R is false

(d)

A is false but R is true

Answer:

(a)

Explanation

Balance of Payments includes both visible and invisible items, providing a broader picture compared to Balance of Trade.