Q. Which of following form part of Trade in services in BoP:

1. factor income - compensation of employees & net investment income
2. non-factor income - shipping, banking, insurance, tourism, software services etc.

Select the correct answer from the codes given below:
Answer: Both 1 and 2
Notes: Both are part of trade in services in BoP. BoT is said to be in balance when exports of goods are equal to the imports of goods. Surplus BoT or Trade surplus will arise if country exports more goods than what it imports. Whereas, Deficit BoT or Trade deficit will arise if a country imports more goods than what it exports. Net Invisibles is the difference between the value of exports and value of imports of invisibles of a country in a given period of time. Invisibles include services, transfers and flows of income that take place between different countries. Services trade includes both factor and non-factor income. Factor income includes net international earnings on factors of production (like labour, land and capital). Non-factor income is net sale of service products like shipping, banking, tourism, software services, etc.

This question is part of UPSC Daily 20 MCQ Series Course on GKToday Android app.