When someone in a country buys an asset abroad,the transaction is recorded

Question

Quizplus · Accepted Answer

When someone in a country buys an asset abroad, this transaction is recorded in the financial account as a capital outflow, since money from the domestic economy is being used to purchase an asset from another country. The current account records transactions involving goods, services, income, and unilateral transfers, while the official settlements balance is a measure of a country's overall balance of payments, including both the current and capital accounts. Therefore, neither A nor B are the best choices. Choice C is also incorrect because a capital inflow would refer to money flowing into the domestic economy, whereas this transaction involves money going out of the domestic economy to acquire an asset abroad.

When Someone in a Country Buys an Asset Abroad,the Transaction