The term 'Invisible Trade' in the balance of payments refers to:
A. Only capital transfers
B. Trade in goods only
C. Only foreign direct investment
D. Trade in services, income and transfers
Answer: Option D
Solution (By JKSSB Mock Tests)
Invisible trade (or invisibles) includes trade in services (such as tourism, software, transportation), income (interest, dividends) and unilateral transfers.
Explanation:
The twin-deficits hypothesis posits a positive relationship between the government budget deficit and the current-account deficit, arising from the national accounting identity linking private saving, investment and the twin deficits.
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