If a Canadian Firm Buys Stereos from a Japanese Firm

question 70

Multiple Choice

If a Canadian firm buys stereos from a Japanese firm and the Japanese firm uses the dollars it gets to buy Canadian Treasury bonds,what items are recorded in the Canadian balance of payments accounts?

• A)credit the trade account;credit the capital account
• B)credit the trade account;debit the capital account
• C)debit the trade account;debit the capital account
• D)debit the trade account;credit the capital account

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Definitions:

Prime Rate

The interest rate at which banks lend to their most credit-worthy customers, often used as a benchmark in the lending industry.

Creditworthy Corporate

A company deemed reliable in repaying debts, often assessed through credit ratings.

Transactions Demand

The demand for money or assets that can be quickly converted into money for the sake of everyday transactions.

Economic Reason

The underlying rationale or motive behind financial decisions or actions, often based on maximizing efficiency or profit.