Consider the following statements:
1. Like GDP, the concept of residence is central to BoP compilation.
2. The meaning of residence is different in GDP and BoP compilation.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question

Consider the following statements:
1. Like GDP, the concept of residence is central to BoP compilation.
2. The meaning of residence is different in GDP and BoP compilation.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: The concept of "residence" is fundamental to both GDP and BoP. In GDP, economic activities are recorded based on the residence of production units within a country&rsquo;s territory, while in BoP, transactions are classified based on the residence of economic agents.

Statement 2 is not correct: The concept of "residence" is defined similarly in both GDP and BoP. In both cases, "residence" refers to entities (individuals, businesses, or institutions) that have a center of economic interest in a country, typically for a period of one year or more.

Balance of Payments (BoP)

Residence in BoP Compilation

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M Question 1	⏱ 0
Consider the following statements: 1. Like GDP, the concept of residence is central to BoP compilation. 2. The meaning of residence is different in GDP and BoP compilation. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2