When a U.S.firm imports a good from England a pays for it by drawing on its pound sterling balances in a London Bank,the U.S.debits its current account and credits its:
A) official reserve account
B) secondary income account
C) services in its current account
D) financial account

Question

Quizplus · Accepted Answer

When the U.S. firm pays for the import using its pound sterling balances, it is essentially using its financial assets, which affects the financial account. The current account is debited for the import, and the financial account is credited because the firm is using its foreign currency holdings.

When a USFirm Imports a Good from England a Pays for It