An American consumer buys a French luxury product in New York. In the U.S. balance of payments accounts, this transaction directly appears in
A) the official settlements account.
B) the imports part of the current account.
C) the net transfers part of the current account.
D) the capital and financial account.
B
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Asymmetric shocks pose a problem for nations linked by fixed exchange rates to a base currency. In general:
A) the home nation always has a better outcome than its foreign trading partner. B) both nations share a common currency and so will experience equal results. C) when the base currency nation takes any action to counteract the shock, it forces its exchange rate partner to do the same to maintain its peg. D) both nations only get half the benefit of any economic policy.
In the figure above showing the costs and benefits of paper production, there is an
A) external cost associated with paper production. B) external benefit associated with paper production. C) external cost associated with paper consumption. D) external benefit associated with paper consumption.