Pearson 23 Balance of Payments

This account records a nation's imports and exports of goods, services, net investment income, and net transfers.

• current account
• financial/capital account
• official reserves

This account records flows of money from the purchase and sale of real estate and financial assets between countries.

• current account
• financial/capital account
• official reserves

The Malaysian government buys a new Boeing 787 from the U.S. This transaction is recorded as

• current account
• financial/capital account
• official reserves

Financial Account transactions include items such as

• Imports
• Exports
• Transfers & Remittances
• Purchase and sale of stocks and bonds

How is the payment of interest on foreign loans recorded in the BoP?

• As an income debit in the current account
• As a service debit in the current account
• As a foreign investment debit in the financial account

How is spending by tourists visiting Australia recorded in the BoP?

• As a service debit in the current account
• As an income credit in the current account
• As a service credit in the current account
• As a service credit in the capital account

Expenditure by Toyota Australia, on freight costs for imported cars, is recorded in the balance of payments as

• an income debit in the current account
• a service debit in the current account
• a service deficit in the current account
• an income deficit in the current account

A rise in import spending would, ceteris paribus,

• increase an existing Balance on Goods and Services deficit.
• reduce an existing current account deficit

The Australian govt spent $19m on the construction of the Thai-Laos Friendship bridge across the Mekong River. This payment was recorded in the Balance of Payments as

• a debit in secondary income
• a debit in the Financial account
• a capital transfer debit

Any nation experiencing a current account deficit must also be running a financial account surplus?

• True
• False