Balance of Payments Practice

Which of the following will be accounted for on the current account of an economy’s balance of payments?

• Dividends from foreign investment

• Sale of copyright

• FDI

• Short term flows of hot money

Which of the following would appear as a credit item in the UK balance of payments?

• Dividend payments by Rolls Royce to Irish investors

• Money sent by UK residents to their relatives abroad

• Expenditure by the British Government in maintaining foreign embassies overseas

• The expenditure of Japanese tourists on holiday in Britain

Japanese tourists spend $3 million in the U.S.; U.S tourists spend $5 million in Japan.

• Current Account

• Capital and Financial Account

• Credit

• Debit

Small Boutique, a store in New Zealand, buys $5,000 worth of purses from a U.S.-based brand for their store.

• Current Account

• Capital and Financial Account

• Credit

• Debit

Sam Boney, U.S. ice-rink magnate, buys stock in a Chilean ice-rink chain.

• Current Account

• Capital and Financial Account

• Credit

• Debit

Miss Kater, an American, invests $100,000 into a resort in Indonesia

• Current Account

• Capital and Financial Account

• Credit

• Debit

A Saudi Arabian company sells oil to an American gas station chain.

• Current Account

• Capital and Financial Account

• Credit

• Debit

Ford, a U.S. company, sells police cars to an Italian police force.

• Current Account

• Capital and Financial Account

• Credit

• Debit

A South Korean investor buys a factory in Ohio.

• Current Account

• Capital and Financial Account

• Credit

• Debit

A Cuban immigrant in the U.S. sends back money to their family in Cuba.

• Current Account

• Capital and Financial Account

• Credit

• Debit