Question

A tourist from Detroit buys a meal at an expensive restaurant in Lyons, France. This transaction would be recorded on the U.S. balance of payments as a a ) Financial account credit b) Current account debit ) Capital account debit d ) Current account credit

Answer 1

Answer :a ) Financial account credit

Explanation for the answer :

The meal at the restaurant is a purchase of a foreign service, i.e. a foreign service import, so it’s debited in the U.S. credit account as a service import.

Since the traveler’s check is issued in US dollars, since he got them in Detroit, and thus backedby a US financial institution. When the french restaurant cashes the traveler’s check this is a sale of a U.S. financial asset, so it is credited as such in the U.S. financial account.