distinguish between autonomous transaction and accommodating transactions in the balance of payment ?what is the significance of this distinction?plz explqin in brief 6 marks q.I am unable to explain significance.

Dear student,

Following are some differences between autonomous and accommodating transactions:

Autonomous transactions Accommodating transactions
These are the international transactions which are undertaken for economic motive, i.e profit.  These are the international transactions which are not undertaken for economic motive. for example- government financing. 
These transactions are called Above the line items in BOP. These transactions are called Below the line items in BOP.
The balance of these transactions govern the overall BOP balance. These transactions are compensating in nature. These  transactions correct the disequilibrium in autonomous items.
If autonomous receipts are less than payments then it show deficit balance in BOP and vice versa.  If there is deficit balance in BOP, then government run down its reserve in form of accommodating transaction to cover deficit in autonomous transaction. 


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