Answer to Question #208683 in Microeconomics for lokesh

Question

Exports

A) bring foreign exchange, and thus they are registered as credit in the balance of payments.

B) bring foreign exchange, and thus they are registered as debit in the balance of payments.

C) cause foreign exchange to leave the country, and thus they are registered as credit in the balance of payments.

D) cause foreign exchange to leave the country, and thus they are registered as debit in the balance of payments.

Answer 1

In balance of payment, a debit is done on any financial flow that results in money leaving a country. On the other hand, a credit is done on items that bring money to a nation. Therefore, the correct answer is A.(exports bring foreign exchange and thus they are registered as credit on the balance of payment).