Scenario: There are two countries-Country X and Country Y-that trade only with each other. During a particular year, the residents of Country X purchased buildings worth $10 billion in Country Y. None of the other transactions between the two countries during that year involved the purchase or sale of assets.
-Refer to the scenario above.The purchase of assets by the residents of County X would lead to a ________ in County Y.

Question

Quizplus · Accepted Answer

The purchase of buildings by the residents of Country X from Country Y involves a transfer of assets from Country Y to Country X, resulting in a financial account surplus for Country Y. This does not necessarily reflect a trade deficit or a trade surplus between the two countries, as those would be determined by the overall balance of trade in goods and services. However, since no other transactions of assets were involved, the financial account surplus would equal the value of the assets purchased by Country X.

Scenario: There Are Two Countries-Country X and Country Y-That Trade