How are foreign acquisitions of U.S. government securities classified in the balance of payments?

Multiple choice question for The Balance of Payments. Select an option, then review the explanation below.

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A credit entry in the current accountA debit entry in the capital accountA credit entry in the capital accountA debit entry in the current account

Explanation

When foreigners purchase U.S. government securities, it results in a capital inflow, which is recorded as a credit in the capital account of the balance of payments. It is not part of the current account, which deals with trade in goods and services.

Practice related questions from the same subject.

1.Which of the following statements about the balance of payments is accurate?
2.What term describes the difference between a nation's exports and imports of goods?
3.What is required to reconcile discrepancies in the balance of payments accounts?
4.What does the balance of trade specifically measure?
5.Which economic pattern is commonly observed in countries during the initial phases of rapid economic growth?

How are foreign acquisitions of U.S. government securities classified in the balance of payments?

Explanation

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