What represents the international sale and purchase of financial assets in BoP?Visible tradeInvisible tradeFinancial accountCurrent account
Question
What represents the international sale and purchase of financial assets in BoP?Visible tradeInvisible tradeFinancial accountCurrent account
Solution
The international sale and purchase of financial assets in Balance of Payments (BoP) is represented by the Financial account. The Financial account records transactions that involve financial assets and liabilities between residents and non-residents. This includes direct investment, portfolio investment, and other investments.
Here's a brief explanation of each term:
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Visible Trade: This refers to the import and export of goods that are tangible or can be seen. It is recorded in the current account of the BoP.
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Invisible Trade: This refers to the import and export of services, i.e., transactions that do not result in the transfer of physical items. It is also recorded in the current account of the BoP.
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Financial Account: This records transactions of financial assets and liabilities between a country's residents and the rest of the world. It includes foreign direct investment, portfolio investment, and other investments.
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Current Account: This records a country's transactions with the rest of the world involving goods, services, income, and current transfers. It includes visible and invisible trade.
So, the international sale and purchase of financial assets in BoP is represented by the Financial account.
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