Suppose that a U.S. exporter sells goods to a foreign firm and receives payment by the foreign firm drawing down its New York bank account and transferring the funds to the U.S. exporter's New York bank account. In this situation, the debit entry in the U.S. balance of payments account is _________.
A) "exports of goods"
B) "increase in foreign short-term private assets in the United States"
C) "decrease in foreign short-term private assets in the United States"
D) "increase in U.S. short-term private foreign assets abroad"

Question

Quizplus · Accepted Answer

The debit entry in the U.S. balance of payments for this transaction is a "decrease in foreign short-term private assets in the United States" because the foreign firm is using its New York bank account (a foreign asset in the U.S.) to make the payment, thus reducing its assets held in the U.S.

Suppose That a U