Which of the following transactions represents an inﬂow of money on the ﬁnancial account of the U.S. balance of payments?
A) Oil is imported from Venezuela.
B) United States ﬁrms pay dividends to foreigners.
C) United States citizens purchase foreign securities.
D) A Canadian ﬁrm increases its direct investment in its U.S. branch.

Question

Quizplus · Accepted Answer

An increase in direct investment in a U.S. branch by a foreign firm represents an inflow of money on the financial account of the U.S. balance of payments. Option A represents an outflow of money (since oil is being imported), option B represents an outflow of money (since dividends are being paid out to foreigners), and option C represents an outflow of money (since U.S. citizens are purchasing foreign securities).

Which of the Following Transactions Represents an Inﬂow of Money