For the following question assume the following facts:
(1 ) Balance of Payments = 0 prior to the transactions.
(2 ) Person A (who lives in the United States) purchases an airplane from British Airways for $150,000.
(3 ) Person A pays with a check from his account at First Union Bank in the United States.
(4 ) British airways, since it will need dollars in 1 month, deposits the check at the Bank of England.
(5 ) Bank of England deposits the $150,000 at Commonwealth bank, which is located in the United States.
Due to the transactions above, what are the effects on the balance of payments?
A) -$150,000 due to import of good (current account debit)
B) +$150,000 due to import of good (current account credit)
C) -$150,000 due to deposit of Bank of England (capital account debit)
D) +$150,000 due to deposit of Bank of England (capital account credit)
E) No effect (150,000 current account debit and 150,000 capital account credit)
E
You might also like to view...
The demand for labor curve is identical to the:
a. total wage cost curve. b. marginal resource curve. c. total revenue curve. d. marginal revenue product curve. e. marginal revenue curve.
If at the profit maximizing level of output, the AR curve lies below the ATC curve in the short run, the firm is earning positive economic profit
a. True b. False Indicate whether the statement is true or false
Chris just completed his college degree from a prestigious university. He did not go to school to become more productive. Rather, he went to school and completed his degree to convey his innate productivity to employers. To which theory of education does he subscribe?
The water and diamonds paradox can be explained by considering:
(a) Marginal Utility. (b) The difference between inferior and luxury goods. (c) Long run costs. (d) It cannot be explained.