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Which of the following appears in the capital account part of the balance of payments?
A) A gift to a Canadian from his English aunt
B) A purchase by the Honda corporation of a Canadian Treasury bill
C) A purchase by the Bank of England of a Canadian Treasury bill
D) Income earned by the Honda corporation on its automobile plant in Ontario
Answer: B
Diff: 2 Type: MC Page Ref: 496
Skill: Applied
Objective List: 20.2 Discuss international financial transactions and the balance of payments
The net amount of international reserves that move between governments to finance
international transactions is called the ____ balance.
A) capital account
B) current account
C) trade
D) official reserve transactions
Answer: D
Diff: 2 Type: MC Page Ref: 496
Skill: Recall
Objective List: 20.2 Discuss international financial transactions and the balance of payments
If the current account balance shows a surplus, and the capital account also shows a surplus,
then the official reserve transactions balance ____.
A) must be positive
B) must be negative
C) must be zero
D) can either be positive, negative, or zero
Answer: A
Diff: 2 Type: MC Page Ref: 497
Skill: Recall
Objective List: 20.2 Discuss international financial transactions and the balance of payments
A current account surplus indicates that Canada is ____ its claims on foreign wealth,
while a deficit indicates that this country is ____ its claims on foreign wealth.
A) reducing; reducing
B) reducing; increasing
C) increasing; reducing
D) increasing; increasing
Answer: C
Diff: 2 Type: MC Page Ref: 497
Skill: Recall
Objective List: 20.2 Discuss international financial transactions and the balance of payments