Question

Assertion (A): Increased lending abroad are recorded on the debit side of the capital account. Reason (R): Lending affect the assets and liabilities of the economy and involves out flow of income.​

Answer 1

Answer:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Explanation :

• The lending to abroad results outflow of foreign currency that also increases the financial assets of a country. Those foreign transactions that affects the coutries financial assets comes in capital account

Answer 2

Explanation:

Alternatives:

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 and 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.