A U.S. firm buys a new Volvo, built in Sweden. In the U.S. balance of payments, this transaction causes the balance on the _____ account to _____.

Question

Quizplus · Accepted Answer

This transaction is a purchase of a good (the Volvo), which is included in the current account of the balance of payments. Since the U.S. firm is importing a good, this will cause the balance on the current account to decrease.

A US Firm Buys a New Volvo, Built in Sweden