A debit transaction would appear on the balance of payments as a result of
A) the export of goods abroad
B) the export of services abroad
C) transfer payments received by domestic residents
D) outflows of investment capital

Question

Quizplus · Accepted Answer

A debit transaction refers to an outflow of funds from a country. Outflows of investment capital, such as when domestic residents invest in foreign companies, would result in a debit transaction on the balance of payments. Option A and B are incorrect because they would lead to a credit transaction, as exports generate revenue for the country. Option C is also incorrect because transfer payments received by domestic residents would not affect the balance of payments.

A Debit Transaction Would Appear on the Balance of Payments