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

• income account

• trade Account

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

• current account

• financial/capital account

• income account

• trade account

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

• a goods account debit

• a capital account credit

• a credit on the net goods account

• a debit on the income account

Financial Account transactions include items such as

• Imports of financial services

• Payment of salaries

• Transfers & Remittances

• Purchase and sale of stocks and bonds, foreign investment

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

• As a foreign investment credit 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 importing cars (the cost of shipping), 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 (select 2 correct answers)

• increase an existing net goods deficit

• reduce an existing current account deficit

• be recorded as a credit in the net goods account

• increase 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 credit

• a debit in the goods account

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

• True

• False

• This is true most of the time but can theoretically be false