Hellllppppp (1 Viewer)

[Munti]

Someone please explain to me how the answer to this multiple choice question is A? Because I thought it was D!

I am utterly confused. pls help.

 

[BMWM2]

Hi Munti,

what paper and year is this from? Some of the old papers have different terminology and in this case, the capital account may also be recognised as the capital and financial account - this is just an idea

I don't believe it can be A: the capital account alone is very small and is used to measure conditional aid, capital transfers from migrants etc and non produced, non financial assets

 

[Munti]

Hi Munti,

what paper and year is this from? Some of the old papers have different terminology and in this case, the capital account may also be recognised as the capital and financial account - this is just an idea

I don't believe it can be A: the capital account alone is very small and is used to measure conditional aid, capital transfers from migrants etc and non produced, non financial assets

Yeah you're most probably right on that theory. It's from 1996 if I recall correctly. Would you agree that it's D?

thanks

 

[BMWM2]

Yeah you're most probably right on that theory. It's from 1996 if I recall correctly. Would you agree that it's D?

thanks

yeah, this would be my choice - these inflows of capital/investment must be serviced through repatriation of dividends back overseas, thus a debit on the current account

 

[Munti]

yeah, this would be my choice - these inflows of capital/investment must be serviced through repatriation of dividends back overseas, thus a debit on the current account

Agreed. Thanks!!

 

[KingTings]

This is a strange question. Foreign investment in companies classifies a credit in the financial account and as a debit in the current account (via net primary income), since dividends goes overseas to Japan with funds coming domestically from Japan.
The capital account refers to the trade in intellectual property and most non-financial assets, so it wouldn't even be recorded there.
It should be D as previously stated.