AeroTech, a German firm, deposits a check in a U.S. bank. The deposit will be recorded as a ________.

Question

Quizplus · Accepted Answer

When AeroTech deposits a check in a U.S. bank, it is essentially transferring funds from a foreign bank account to a U.S. bank account. This constitutes a capital inflow in the U.S. Balance of Payments (BOP) because it represents an increase in foreign funds deposited in the U.S. financial system. Option A is incorrect because a capital outflow would refer to a transfer of funds from the domestic financial system to a foreign financial system. Option C is incorrect because a unilateral debit is a transfer of funds without an accompanying transaction of equal value. Option D is incorrect because the deposit does not affect Germany's BOP.

AeroTech, a German Firm, Deposits a Check in a U