Question

Distinguish between autonomous transactions and accommodating transactions of balance of payments account.

Answer 1

Basis of distinction	Autonomous Transactions	Accommodating Transactions
(i) Motive	Autonomous transactions take place due to some economic motive like profit maximisation.	Accommodating transactions take place to cover deficit or surplus in the autonomous transactions.
(ii) Nature	These transactions are independent of balance of payment considerations.	These transactions are in the nature of compensatory transactions to balance the imbalance in BoP.
(iii) Name	These transactions are called “above the line” transactions.	These transactions are called “below the line” transactions.