Which of the Following International Transactions Would NOT Be Counted

question 5

Multiple Choice

Which of the following international transactions would NOT be counted as a balance of payments (BOP) transaction?

• A) An American tourist purchases cheese in Milwaukee, Wisconsin.
• B) The U.S. subsidiary of a British firm pays profits (dividends) back to its parent firm in London.
• C) A Canadian lumber baron purchases a U.S. corporate bond through an investment broker in Seattle.
• D) All of the above are considered BOP transactions.

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Definitions:

Fixed Assets

Long-term tangible assets used in the operation of a business that are not likely to be converted to cash within one year.

Capital Expenditures

Financial resources dedicated by a corporation towards the acquisition, betterment, and maintenance of real assets, like real estate, industrial plants, or machinery.

Collections

The process of obtaining payment of invoices owed by customers.

Insurance Premium

The amount paid periodically to an insurance company in exchange for coverage.