1. For each of the following identify in which part of the balance-of-payments a

Question

1. For each of the following identify in which part of the balance-of-payments accounts it appears (current account, capital account or financial account) and whether it is a credit or debit in the US’s balance of payments:

a. An American resident’s sale of a share of Johnson & Johnson stock by transferring funds from a bank account

b. An French woman’s purchase of an airline ticket from United Airlines (a US airline company)

c. The Swiss government’s purchase of US Treasury bills in exchange for US$ reserves.

Explanation / Answer

a) current account - this involves money movement within country

b) capital account - direct purchase in USD, so revenue flow into capital account

c) financial account - As the swiss governemnet is purchasing treasury for exchange of dollar reserves it should be accounted as financial.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.