Question
How does each of the following transactions affect (i) the current account balance and (ii) the capital account balance for Australia? Show that in each
How does each of the following transactions affect (i) the current account balance and (ii) the capital account balance for Australia? Show that in each case the identity that the trade balance plus net capital inflows equals zero applies.
a)An Australian exporter sells software to Israel. She uses the Israeli shekels received to buy stock in an Israeli company.
b)An East Timorese firm uses proceeds from its sale of oil to Australia to buy Australian government bonds.
c)And East Timorese firm uses proceeds from its sale of oil to Australia to buy oil-drilling equipment from an Australian firm.
d)A British financial investor authorises a bank transfer from his account in New York to purchase shares of AMP (an Australian company).
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