Question

Which of the following does not appear in the current account part of the balance of...

Which of the following does not appear in the current account part of the balance of payments?

A loan of $1 million from Bank of America to Brazil.

Foreign aid to El Salvador.

An Air France ticket bought by an American.

Income earned by General Motors from its plants abroad.

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Answer #1

Option A.

  • The current account part of balance of payments measures the value of goods and services that flow in and out of a country. It also measures the income transfers or any financial payments and transactions made with another nation.
  • This account of balance of payments does not measure the debt payments or loans availed by a country from another country.
  • Hence a loan of $1 million from Bank of America to Brazil does not appear in the current account part of the balance of payments.
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