Changes in the amount of foreign aid the U.S. provides to developing nations would directly affect:
A) its balance of payments but not its balance of trade.
B) its balance of trade but not its balance of payments.
C) both the U.S. balance of payments and the balance of trade by roughly equal amounts.
D) neither its balance of payments nor its balance of trade.

Question

Quizplus · Accepted Answer

Foreign aid affects the balance of payments as it is a financial transaction with other countries, but it does not directly affect the balance of trade, which deals with exports and imports of goods and services.

Changes in the Amount of Foreign Aid the U