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Suppose that Country A initially has no external transactions (i.e. residents, companies and the government of Country A engage in no transactions with foreign entities).

Suppose that Country A initially has no external transactions (i.e. residents, companies and the government of Country A engage in no transactions with foreign entities). Then, a resident of A sells $1,000 worth domestic shares to a foreign investor and uses the proceeds to purchase a camera from Country B, costing $1,000. Country A's balance of payments will now show:

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A net debit in the current account for $1,000 and a net credit in the capital account for $1,000.

A net debit in the capital account for $1,000 and a net credit in the current account for $1,000.

A net debit in the current account for $1,000 and a net credit in the reserve account for $1,000.

A net debit in the current account for $1,000 and a net credit in the current account for $1,000.

None of the other answers.

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