Question

Distinguish between autonomous items and accommodating items.

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Answer 1

Answer:

autonomous items-

These refer to international economic transactions that take place due to some economic motives like earning income and profit maximisation. They have nothing to do with foreign exchange payments. Since such transactions are independent of the state of country’s balance of payment, i.e., irrespective of whether BOP is favourable or unfavourable, they are, therefore, called autonomous items.

Accommodating items -

These refer to transactions that take place to cover deficit (or surplus) arising from autonomous transactions. These items are also called ‘below the line items’. Because of government financing, official settlements are seen as accommodating items to keep the BOP identity.

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