For each of the following transactions, determine which U.S. account will be credited.

a. The United States imports $100 million in clothing from China. China receives a financial payment.

• Capital account

• Financial account

• Current account

b. British investors purchase $50 million in U.S. stocks and bonds for retirement accounts.

• Financial account

• Capital account

• Current account

c. The United States exports $250 million in agricultural products to various nations, receiving a financial payment in return.

• Capital account

• Financial account

• Current account

d. A German company purchases a trademark from a U.S. company, receiving a financial payment in return.

• Current account

• Capital account

• Financial account

1. When does a trade deficit occur?

• The balance of payments is negative.

• Debits to the current account exceed the credits.

• Credits to the financial account exceed the debits.

• Credits to the current account exceed the debits.

2. Which of the following statements concerning a trade deficit is true?

• Net exports are positive.

• Imports exceed exports.

• The domestic currency has appreciated.

• The federal government holds a significant debt balance.