A52-Imbalance of Payments

Read the following carefully and then answer the questions:

REMINDER: The CAPITAL account is also referred to as the FINANCIAL account.

Current account: exports and imports of goods, services, net investment income, and net transfers.

Capital (financial) account: purchase and sale of financial assets.

If the transaction uses foreign currency it is a DEBIT (negative).

If the transaction earns foreign currency it is a CREDIT (positive).