GPE MODULE 1 WITH QUESTIONS AND
100% CORRECT ANSWERS { GRADED
A+}
Balance of Payments - ✔✔the accounting record of all monetary transactions
between a country and the rest of the world. Theoretically, the___ is always zero at
the end of the fiscal year
=CA+KA (real estate capital account)+FA (financial capital account)
Current account has four components:
CA= - ✔✔exports (X)
import (M)
,interest income
unilaterial transfers
(X-M)+balance on interest income+balance on unilateral transfers
Exports of goods and services (X) - ✔✔shown as credit in CA because earns
foreign currency for the home country
the revenue from export defines the supply of foreign exchange or foreign currency
(FC) in the Foreign Exchange Market
Import of goods and services (M) - ✔✔shown in CA as debit because it costs
money to buy them from foreign countries
the cost of import defines the demand for FC in the FOREX
Interest Income - ✔✔For example, if GE builds a turbine factory in India and sells
the turbine made in India to Thailand, it will generate profit from the sale. It is
, interest income on capital investment in India. If the profit is transferred back to
the United States, it will be recorded as interest income or credit in the U.S. CA
Like Apple, Inc., hundreds of U.S. global companies keep their profits (interest
income on capital) abroad. Also, thousands of foreign companies owned by China,
Saudi Arabia, Russian oligarchs, and others keep their profits in the United States
Unilateral Transfers - ✔✔These are, for example, U.S. government payments to
the International Monetary Fund (IMF) or the World Bank (WB), or simply Social
Security checks sent to U.S. citizens who retired to Costa Rica, Mexico, or the
Caribbean.
Real Estate Capital account (KA) - ✔✔balance of the migrant money, the
forgiven debt, and the real estate transactions of the government (fixed capital)
this account records money that noncitizens send to home countries
debt forgiveness and buying/selling embassies or miltiary bases recorded here
100% CORRECT ANSWERS { GRADED
A+}
Balance of Payments - ✔✔the accounting record of all monetary transactions
between a country and the rest of the world. Theoretically, the___ is always zero at
the end of the fiscal year
=CA+KA (real estate capital account)+FA (financial capital account)
Current account has four components:
CA= - ✔✔exports (X)
import (M)
,interest income
unilaterial transfers
(X-M)+balance on interest income+balance on unilateral transfers
Exports of goods and services (X) - ✔✔shown as credit in CA because earns
foreign currency for the home country
the revenue from export defines the supply of foreign exchange or foreign currency
(FC) in the Foreign Exchange Market
Import of goods and services (M) - ✔✔shown in CA as debit because it costs
money to buy them from foreign countries
the cost of import defines the demand for FC in the FOREX
Interest Income - ✔✔For example, if GE builds a turbine factory in India and sells
the turbine made in India to Thailand, it will generate profit from the sale. It is
, interest income on capital investment in India. If the profit is transferred back to
the United States, it will be recorded as interest income or credit in the U.S. CA
Like Apple, Inc., hundreds of U.S. global companies keep their profits (interest
income on capital) abroad. Also, thousands of foreign companies owned by China,
Saudi Arabia, Russian oligarchs, and others keep their profits in the United States
Unilateral Transfers - ✔✔These are, for example, U.S. government payments to
the International Monetary Fund (IMF) or the World Bank (WB), or simply Social
Security checks sent to U.S. citizens who retired to Costa Rica, Mexico, or the
Caribbean.
Real Estate Capital account (KA) - ✔✔balance of the migrant money, the
forgiven debt, and the real estate transactions of the government (fixed capital)
this account records money that noncitizens send to home countries
debt forgiveness and buying/selling embassies or miltiary bases recorded here
