INTERNATIONAL MACROECONOMICS AND FINANCE CHOOSE THE OPTION FROM HIGHLIGHTED BELO

Question

INTERNATIONAL MACROECONOMICS AND FINANCE

CHOOSE THE OPTION FROM HIGHLIGHTED BELOW: PLS , I WILL BE VERY GRATEFUL IF YOU CAN EXPLAIN .

According to David Waring, when measuring capital flows into and out of a country those capital flows include

only cross-border mergers and acquisitions.

only bond market investments.

only bond and equity market investments.

cross-border mergers and acquisitions.

only equity market investments.

1b

.If a Swedish company purchases an ink-jet fax machine from the Italian company Olivetti, paying with a 9000 kr bank transfer, then according to IMF definitions it should show up as

9000 kr credit in Sweden's current account and as a 9000 kr debit in Sweden's financial account.

a 9000 kr debit in Sweden's current account and as a 9000 kr credit in Sweden's capital account.

a 9000 kr credit in the Swedish current account and as a 9000 kr debit in Sweden's capital account.

a 9000 kr debit in Sweden's current account and as a 9000 kr credit in Sweden's financial account.

a 9000 kr debit in Sweden's current account and as a 9000 kr debit in Sweden's financial account.

Explanation / Answer

according to IMF definitions it should show up as

"a 9000 kr debit in Sweden's current account and as a 9000 kr credit in Sweden's capital account."

This is because the cash in the current account of the sweden bank is being transferred to the Italy bank and on the conrtrary the capital assets has been transferred to the sweden, which increases the Sweden's Gross Capital Assets which helps revenue accruals and employment in sweden.

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