Question

Classify the scenarios as part of the U.S. capital account or the U.S. current account.

1. You are currently in a labeling module.
2. Turn off browse mode or quick nav, Tab to items, Space or Enter to pick up, Tab to move, Space or Enter to drop.
3. Al, a U.S. citizen, purchases a vacation home in Ixtapa, Mexico. A U.S. company exports its product.
4. Moira, a U.S. citizen, purchases an imported doll house for her daughter.
5. The Canadian government purchases U.S. Treasury securities.
6. Margarita, a Mexican citizen, receives dividends on stock she owns in Apple, a U.S. company.

Answer 1

Classify each scenario as part of the U.S. financial account or the U.S. current account.

Al, a U.S. citizen, purchases a vacation home in Ixtapa, Mexico.

Financial Account

A U.S. company exports its product.

Current Account

Moira, a U.S. citizen, purchases an imported dollhouse for her daughter.

Current Account

The Canadian government purchases U.S. Treasury securities.

Financial Account

Margarita, a Mexican citizen, receives dividends on stock she owns in

Apple, a U.S. company.

Current Account

Step-by-step explanation:

The balance of payments is divided into two accounts, the capital and financial account and the current account. The U.S. financial account includes financial assets and real assets. The current account includes goods, services, income payments, and transfers.

The scenarios of Al's vacation home and the Canadian government purchasing U.S. Treasury securities belong in the financial account.

Imports, like Moira's daughter's dollhouse, exports, and the dividends Margarita receives from Apple are all part of the current account.

Answer 2

The Current account has to do with the trade of goods and services across countries.

The Capital account on the other hand deals with transfers of funds as well as investments - including real estate - in other countries.

3. Al, a U.S. citizen, purchases a vacation home in Ixtapa, Mexico.⇒ U.S. CAPITAL ACCOUNT.

Deals with an investment in another country so this goes to the Capital account.

4. A U.S. company exports its product. ⇒ U.S. CURRENT ACCOUNT

This has to do with the trade of goods so falls under the current account.

5. Moira, a U.S. citizen, purchases an imported doll house for her daughter. ⇒ U.S. CURRENT ACCOUNT.

This has to do with a trade in goods and services so goes to current account.

6. The Canadian government purchases U.S. Treasury securities. ⇒ U.S.. CAPITAL ACCOUNT.

This has to do with an investment in the United States from another country so this is a capital account transaction.

7. Margarita, a Mexican citizen, receives dividends on stock she owns in Apple, a U.S. company. ⇒ U.S. CURRENT ACCOUNT.

Dividends and remittances fall under the current account when coming from another country.