Question

The sale of American computers to the Spanish government shows up as
Question 6 options:

1) a debit on the official reserves account

2) a credit on the official reserves account

3) a credit on the trade account

4) a debit on the current account

The sale of US treasury bonds by a French investor shows up as (from the US perspective):

1. a credit on the capital account

2. a debit on the trade account

3. a credit on the official reserves account

4 .none of the above

I need explanations!!!

Answer 1

a) A sale of the computer to the Spanish government is export for the US and exports come up as credit in the current account for the US. As the computer is a good it will be part of the trade account. the answer is "C" a credit on the trade account.

b) A sale of the treasury bond will part of the reserve account and as it is outgoing it will be credited. The answer is "C" a credit on the official reserve account. (any bond or transfer of capital funds are part of the reserve account. )