Explain the three categories of balance of payments transactions
What will be an ideal response?
Current account transactions relate to sales and purchases of goods and services. These include goods, services, and unilateral transfers. The capital account consists of transactions involving financial assets. If there are no official reserve transactions, the sum of the current account and the capital account is zero. Official reserve transactions involve payments or receipts of official reserves by the government. If the United States is running a deficit so that foreigners are turning dollars in for reserves, the official reserves of the government will decrease.
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The process of building up capital includes
a. acquiring funds from banks and other sources. b. use of borrowed funds to hire inputs to build factories, warehouses, etc. c. completion of the investment process by adding machinery and inventory. d. All of the above are correct.
As long as average revenue remains above average total cost:
A. total revenue will be higher than total cost. B. the firm will be making profits. C. price will be greater than average total cost. D. All of these are true.
The law of increasing opportunity cost says that
a. wages increase as employment increases b. interest rates rise as inflation increases c. the cost of increasing employment opportunities increases with specialization d. the more of something we produce, the less expensive it becomes e. the more of something we produce, the greater is the opportunity cost of producing an additional unit
Tommy's Tires operates in a perfectly competitive market. If tires sell for $50 each and ATC = $40 per tire at the profit-maximizing output level, then in the long run
a. more firms will enter the market b. some firms will exit from the market c. the equilibrium price per tire will rise d. average total costs must fall e. marginal revenue will rise