Scenario: Happyland
Happyland, a country of about 48 million people with beautiful beaches, vast natural resources, and a highly skilled labor force, is encouraging foreign direct investment flows. The country has been exporting textiles, computer hardware, and software. The net result of trade is that Happyland exports far more goods and services and receives more income from abroad than it imports and pays abroad.
-If Happyland markets its beaches and attracts tourists, the tourism-related income would be included in its ________.
A) capital account
B) service account
C) income payments account
D) merchandise account

Question

Quizplus · Accepted Answer

Tourism is considered a service, so the income from tourism would be included in Happyland's service account. The capital account is for flows of investment and financial instruments, the income payments account is for payments made to foreign entities for goods and services imported, and the merchandise account is for the trade of tangible goods.

Scenario: Happyland Happyland, a Country of About 48 Million People with Beautiful