Economic Awareness - Sectors of Indian Economy
Which of the following transactions clearly represents an external sector activity involving services?
Which of the following transactions clearly represents an external sector activity involving services?
easy Q1 of 15
Step-by-Step Solution
Step 1: Recall what constitutes the external sector
The external sector includes all economic transactions between residents and non-residents, covering both goods and services.Step 2: Analyze each option
Spending by Indian tourists abroad involves residents transacting with foreign entities and is recorded as import of services in the Balance of Payments.Step 3: Eliminate domestic transactions
Domestic retail sales, government spending, and local bank lending are internal transactions and excluded from the external sector.Final Answer:
Indian tourists spending money abroad → Option BQuick Check:
Cross-border service transactions = external sector ✅
Quick Trick: External sector includes trade in services like tourism.
Common Mistakes:
MISTAKES- Ignoring services while identifying external sector transactions.
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