Question

Surplus in Balance of Payments (BOP) refers to the excess of -------. (Choose the correct alternative to fill in the blank)

• A. Autonomous payments over Autonomous receipts
• B. Current Account payments over Autonomous receipts
• C. Capital Account receipts over Capital Account payments
• D. Autonomous receipts over Autonomous payments

Hint:

A Balance of Payments surplus means that the country receives more foreign exchange than it spends, indicating a net inflow of money.

Answer 1

The Correct Option is D

Step 1: Understanding Balance of Payments Surplus. A surplus in the Balance of Payments occurs when a country's Autonomous Receipts (inflows) exceed its Autonomous Payments (outflows). Step 2: Evaluating the options.
- (A) Incorrect, as a surplus happens when receipts exceed payments.
- (B) Incorrect, as Current Account payments alone do not determine a surplus.
- (C) Incorrect, as Capital Account transactions do not fully represent BOP surplus.
- (D) Correct, since Autonomous Receipts exceeding Autonomous Payments creates a BOP surplus.
Step 3: Conclusion. Thus, the correct answer is \( \mathbf{(D)} \).