Question

Table 1 Transaction numberTransaction (Year 2018)

Amount1Interest paid by a Country B’s corporation on a bond owned by a Country C’s bank$2’000

2.Interest paid by Country A’s government on a treasury bills owned by Country C’s government$3’000

3.Country A imports of soybeans from Country C$4’000

4.Country A’s citizen donation to a Non-Governmental-Organization locatedin Country A $2’000

5Country A’s sale of Country B’s government bonds $5’000

6.Country B’s imports of raw materials from Country C $10’000

7.Country A’s corporation wages paid to Country B’s workers $1’000

8.Country C workers’ wages paid by CountryB’s corporation $9’000

9.Country C’s exporter opening a deposit account in a Country A’s bank $8’000

10.Country B’s exporter opening a deposit account in a Country B’s bank$7’000

For Question 2 to 4, Please refer to Table 1

Question2. Which transactions belong to Country B’s financial accounts? 4 Points

a.None of them

b.1 and 5

c.5

d.10

Question 3 .Which transactions belong to Country B’s current accounts? 4 Points

a.1 and 6

b.1, 6, 7 and 8

c.1, 6, 7, 8, and 10

d.3 and 5

Question 4.Which transactions belong to Country A’s current accounts?4 Points

a.2 and 3

b.2, 3 and 7

c.2, 3, 7 and 9

d.2, 3, 4 and 7

Answer 1

Question2. Which transactions belong to Country B’s financial accounts? 4 Points

Correct option a.None of them. Because, option 6 in the question: Country B’s imports of raw materials from Country C $10’000 will be recorded under current account. and option 10 Country B’s exporter opening a deposit account in a Country B’s bank$7’000 will be opening an account within country and hence will not be recorded. However, exports will be recorded under current account.

Question 3 .Which transactions belong to Country B’s current accounts? 4 Points

Correct option b.1, 6, 7 and 8

Current account records following transactions: Export-import of goods/services. Income in the form of earnings or investment and transfers.

7 and 8 in this case are assumed that they are taken by to original countries.This is earned income.

Question 4.Which transactions belong to Country A’s current accounts?4 Points

Correct option: b.2, 3, 7

2 and 3 will be recorded in earned and goods account respectively. 7 will be recorded as debit in transfers in current account.

9 will not be recorded as that is coming as foreign investment which goes under financial account.