Option 3 (capital account, debit side) -> An increase in foreign exchange reserves means the central bank has acquired more foreign currency assets. In balance of payments accounting, an increase in assets is recorded as a debit (representing an outflow or use of funds). Foreign exchange reserves fall under the capital account (or reserve assets in the financial account), so this transaction appears on the debit side of the capital account. -> correct
Suppose the central bank of an economy records a net increase in the foreign exchange reserves for a given quarter. How will this be reflected in the…
CUET UG 2025 — Economics Macro
2025mcqmedium
Suppose the central bank of an economy records a net increase in the foreign exchange reserves for a given quarter. How will this be reflected in the balance of payments account of this economy?
Official previous-year question
Held on 16 May 2025 · Verified 13 Jul 2026.
Options
- A
current account, debit side
- B
current account, credit side
- C
capital account, debit side
- D
capital account, credit side
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