Which of the following would be a credit in the Canadian balance of payments?

Question

Quizplus · Accepted Answer

A short-term loan extended to a foreign country by the Canadian government would be considered a credit in the current account of the balance of payments, as it represents an inflow of funds from abroad.

Answer: D
 The purchase of insurance from Lloyd's of London by a Canadian resident would also be considered a credit in the current account, as the payment represents an import of services from abroad.

B and C would not be credits in the balance of payments. The purchase of a German car by a Canadian would be considered an import of goods, and therefore a debit in the current account. Similarly, a trip to Japan by a Canadian student would be considered an expenditure on services, and also a debit in the current account.

Which of the Following Would Be a Credit in the Canadian