Question

1. If a Japanese bank purchases a US government security, such as a treasury note, this is recorded in current account (credit) of the US balance of payments. (TRUE/FALSE)

2. Portfolio investments, rather than FDI, are risky and may have dramatic effects on host countries and are responsible for easy transmission of financial crisis into the global economy. (TRUE/FALSE)

1. Which of the following is NOT part of the current account?

1. Dividends received on a foreign investment
2. Purchase of a plane ticket on a foreign airline
3. Shipment of food aid to a poor country
4. Purchase of a foreign bond

2. Which of the following transactions would be recorded in the current account?

1. U.S. investors purchase bonds from Germany.
2. The U.S. transfers a military base to another country.
3. The Fed increases its holdings of yen.
4. A person living in the United States sends money home to her family in Cuba.
   

3. Which of the following transactions would be recorded in the capital account?

1. U.S. investors purchase bonds from Germany.
2. The Fed increases its holdings of yen.
3. The U.S. transfers a military base to another country.
4. A U.S. firm sells a machine to a business in another country.

Answer 1

1) False

2) True

3) Option d is correct  Purchases reign bond

Except this all are the currect account parts

4) OPtion d is correct A person living in the United States sends money home to her family in Cuba.

Current account is defined as balance of trade + net income from trade and + current transfer

5) option c is correct = The U.S. transfers a military base to another country.

Capital account record all those transactions between the resident country and rest of world, which also cause change in asessts etc.