Answer to Question #275188 in Economics for keo

Question

Indicate under which item of the current account each of the following transactions is recorded and whether it will increase or decrease the balance on the current account. a. Capeson, a Chadilien exporting company, exports fruit to the Middle East. (2 Marks) b. Jones and Kelly, a Chadilien engineering firm, hires German engineers to help with the construction of new stadiums. (2 Marks) c. You receive a dividend (a part of the profit) because you own some shares in Amazon which is based in the US. 

Answer 1

a. If Capeson, a Chadilien exporting company, exports fruit to the Middle East, then exports will increase and the balance on the current account will increase.

b. If Jones and Kelly, a Chadilien engineering firm, hires German engineers to help with the construction of new stadiums, then payments made to foreign investors will increase and the balance on the current account will decrease.

c. If you receive a dividend (a part of the profit) because you own some shares in Amazon which is based in the US, then the earnings on foreign investments will increase and the balance on the current account will increase.