UPSC Prelims 2014— Question 50

Correct answer: Option C. The current account of the balance of payments records trade in goods and services, income and transfers. Balance of trade is part of it, and balance of invisibles was used in the contemporary Indian presentation for services and other non-merchandise transactions. Foreign assets and Special Drawing Rights are associated with the financial/reserve side rather than the current account. Option A: Incorrect. This option does not match the verified answer because its proposition, location, institution, sequence, or combination conflicts with the relevant fact tested in the question. The option reads: “1 only” Option B: Incorrect. This option does not match the verified answer because its proposition, location, institution, sequence, or combination conflicts with the relevant fact tested in the question. The option reads: “2 and 3” Option C: Correct. This option is consistent with the governing fact or the valid combination identified in the question. The option reads: “1 and 3” Option D: Incorrect. This option does not match the verified answer because its proposition, location, institution, sequence, or combination conflicts with the relevant fact tested in the question. The option reads: “1, 2 and 4” The key Prelims lesson is to test each proposition independently before selecting the combination. Where the question uses words such as 'only', 'all', 'none', 'always' or a precise institutional/geographical association, a single inaccurate component is sufficient to eliminate the option. The answer recorded here follows the official answer key for the question-paper series represented by the uploaded source and has been cross-checked against an independent published key. The explanation is intended for conceptual revision rather than as a reproduction of any third-party solution.