The Current Account Records

question 65

Multiple Choice

The current account records:

• A)last year's flows of funds into and out of the country.
• B)the current flows of imports and exports of goods and services,net income earned by residents from foreign assets,and net transfer payments.
• C)all the foreign direct investment received by a country in a year.
• D)the purchase of financial assets,such as stocks and bonds,by the residents of a country in a year.
• E)the purchase of all real assets,such as land and housing by the citizens of a country in a year.

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Definitions:

Opportunity Cost

The potential benefit that one misses out on when choosing one alternative over another.

Trade

The activity of buying, selling, or exchanging goods and services between people, firms, or countries.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its trade partners.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.