Q1)

You are classifying the following transactions into the different accounts of the U.S. Balance of Payments.

1) Target purchases clothing produced in Thailand that it will sell in its U.S. retail stores.

2) A U.S investor receives a dividend payment from a German firm in which he purchased stock.

3) A university bookstore in France purchases textbooks produced by a U.S. publishing company.

Which of the answer choices is correct?

a) All 3 transactions belong to the Capital Account.

b) One transaction belongs to the Financial Account and two transactions belong to the Current Account

c) All 3 transactions are Debit transactions.

d) All 3 transactions belong to the Financial Account.

e) All 3 transactions belong to the Current Account.

Q2)

What is NOT an example of market imperfections?

a) There are transaction and/or transportation costs

b) Italy puts restrictions on capital flows.

c) All factors of production are easily transferable.

d) Labor cannot move freely from one country to another country.

e) Countries impose import/export taxes