Which of the Following Transactions Would Be Recorded as a Credit

question 48

Multiple Choice

Which of the following transactions would be recorded as a credit in the U.S. current account?

• A) A Japanese bank's purchase of IBM stock.
• B) A Japanese consumer's purchase of an Apple computer.
• C) An American tourist's payment to a Japanese hotel.
• D) An American consumer's purchase of a Toshiba VCR.

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Definitions:

Fixed Exchange Rates

An exchange rate regime where a country's currency value is tied to another currency, a basket of currencies, or another measure of value, such as gold, and does not fluctuate in the foreign exchange market.

Balance of Trade

The difference in value between a country's exports and imports over a certain period.

Goods and Services

Physical items that can be purchased (goods) and intangible assistance or activities provided for consumption (services).

Trade Deficits

A situation where a country's imports of goods and services exceed its exports, resulting in a negative balance of trade.