Debit in the U.S. Balance of Payments

Prev Question Next Question

Question

Which of the following would be a debit in the U.S. balance of payments?

Answers

A. a short-term loan extended to a Japanese manufacturer by a U.S. bank

B. the purchase of a Japanese car by an American

C. the purchase of air service from a U.S. airline by a Japanese traveler

D. the purchase of U.S. grain by a Japanese bakery

Show Answer

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D.

Since the purchase of a car from a Japanese firm by an American increases the supply of U.S. dollars on the foreign exchange market, this transaction is accounted for as a debit on the U.S. current account.

Prev Question Next Question