Question

(e) A firm in country A purchases $3,000 of shipping services from a country B ocean freight carrier, paying for the services by drawing down bank deposits in B owned by the A firmm (f) A's central bank buys $2,000-worth of foreign currency holdings held in a B commercial bank by an A citizen. The central bank adds the foreign currency to its own commercial banlk account in country B 2- Suppose that you had to explain to a person (who is not an economist) why a current account deficit must be accompanied by a financial or capital account surplus. What would you say?

Answer 1

Under the head importer of goods /visible . since leads to an out flow of money . it with be on debit side . Hence $ 8000 would be debit. Transfer of payments are in A/c. The transfer payment of $ 1000 would be debited for current A/C. Assets of a person they are in capital A/C . Trading of bonds loads to change in asset of company . Since country A's Asset will be sold, the country would be credited. sale would be in current a/c . �A� is has sold steel and receive $ 6000 . Amount would be credited country �A� is current Account.