|
- UID
- 222272
- 帖子
- 301
- 主题
- 72
- 注册时间
- 2011-7-2
- 最后登录
- 2014-6-28
|
Components of Capital Account Question
Larry Goren, CFA, is an economist for the Federal Reserve Bank. He is interested in using a country’s balance of payments as a forecasting tool in determining exchange rates. He notices that China has a high current account balance resulting in a large surplus in its balance payments. It can be implied that:
A) China received a great deal of income flows from the sale of trade merchandise and services and payments on its existing investments.
B) China provided a great deal of financial assistance to other nations.
C) China’s international currency reserve holdings have increased.
Your answer: A was correct!
A large increase in China’s current account can only mean that it has received income from the sale of its trade merchandise (exports) and payments on its existing investments. Both remaining transactions affect the other elements of the balance of payment accounts. If China lends financial assistance to other nations, it shows up in its capital account and if its foreign currency reserves increase, it shows up in its official reserve account.
—–
I have an issue with the phrase, “If China lends financial assistance to other nations, it shows up in its capital accountIf China lends financial assistance to other nations, it shows up in its capital account.” Don’t gifts show up in the currenct account and cause a deficit there? |
|
发表于 2013-4-17 16:45
| 