Question

1. Each of the following events will result in either an import or export to be recorded in the current account or the capital account of Vidinland, an imaginary small country in eastern Europe. For each one, say whether it will be a current account import, a current account export, a capital account inflow, or a capital account outflow.

A. Boyan, a prominent resident of Vidinland, purchases a brand new Swedish automobile.

B. Pete, a resident of the U.S., purchases 1,000 cases of fine wine from Vidinland.

C. U.S. residents Allen and Elizabeth go on a bike tour of Vidinland, spending money on hotels, food, and tires.

D. Investors from the U.S. purchase several kashkaval factories in Vidinland.

E. Due to the high quality of the kashkaval produced in Vidinland, the investors from part D receive very large profits.

Answer 1