Suppose that the U.S. government gives foreign aid to Turkey. This transaction would directly

Question

Quizplus · Accepted Answer

Foreign aid is considered an export of services in the current account, as it involves the transfer of resources from the U.S. to Turkey. Therefore, the transaction would increase the U.S. current account, as it represents an inflow of funds to Turkey and an outflow of services from the U.S. On the other hand, it would not affect the U.S. capital account, which records the transfer of assets between countries, such as foreign direct investment, portfolio investments, and acquisitions of real estate.

Suppose That the U