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Chako Chako
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8 years ago
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 deposit of Bank of England (capital account credit)
B) -$150,000 due to deposit of Bank of England (capital account debit)
C) -$150,000 due to import of good (current account debit)
D) No effect (150,000 current account debit and 150,000 capital account credit)
E) +$150,000 due to import of good (current account credit)
Textbook 
International Economics: Theory and Policy

International Economics: Theory and Policy


Edition: 10th
Author:
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machukianmachukian
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8 years ago
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Chako Author
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#2
8 years ago
Good answer, thank you
wrote...
#3
8 years ago
Happy to help you!
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