Question

If a bond issued by a Swiss company is sold to someone in Brazil, the transaction would result in a credit to Brazil's capital account.

True or False

A nation's balance of trade records the import and export of goods, services and unilateral transfers.

True or False

All else being equal, an increase in a country's inflation rate relative to its trading partners will tend to decrease its balance of trade.

True or False

Answer 1

1) Answer is false

As the transaction between the Swiss company and Brazil is related to the Financial Account instead of capital account. Financial account includes investments domestic entities make in foreign entities and vice versa.

2)Answer is True

Balance of trade includes all the visible items that are transfered from one country to another.

3)Answer is True

As the country's inflation increases, it diminishes the value of that currency in the foreign market. Thus effects negatively on the balance of trade.