CFA Level 1: Balance of Payments and Central Bank Transactions

CFA Level 1: Balance of Payments and Central Bank Transactions

Prev Question Next Question

Question

Which of the following is/are true?

I. All Central bank transactions are excluded from the BOP account.

II. All cash flows associated with foreign investments belong to the Capital account.

III. Repatriation of domestic currency to a foreign country by foreign nationals living in the country are treated as part of the Current account.

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D.

B

All Central Bank transactions are excluded from the Current and Capital accounts and charged to the Official Reserve account. However, since the Reserve account is part of the BOP account, I is false.

Direct foreign investments are Capital account items. However, income associated with these is treated as part of the Current account. Hence, II is false.

III is a direct outflow of domestic currency and treated as a debit entry on the Current account.

Prev Question Next Question