Question

A​ country's financial account includes​ ____________. ​(Check all that apply.​) A. payments from abroad for exports....

A​ country's financial account includes​ ____________. ​(Check all that apply.​) A. payments from abroad for exports. B. payments to foreigners for imports. C. the change in foreign assets held domestically. D. the change in domestic assets held by foreigners. E. transfers from abroad.

The net flows in the financial account​ ____________.

A. are equal to the net changes in factor payments and transfers from abroad. B. are larger in absolute value than the net flows in the current account. C. exactly offset the net flows in the current account. D. are smaller in absolute value than the net flows in the current account. E. are equal to the net change in trade.

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Answer #1

Financial account is a art of a country's Balance of Payments.It records transactions in assets.It includes- change in domestic assets held by foregners. and change in foreign assets held domestically.( Option c and d)

The BOP of a country should be zero. And as we know, the BOP consists of the current account on one side and the capital and financial account on the other side. These sides should balance.therefore, the absolute value of net flows to the financial acxount should be less than the absolute value net flows to the current account.Because there is also the capital account to balance the excess current account value. Option d is correct.

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