multiple choice questions (1 Viewer)

[darshil]

I was trying these out, and seriously thought I got them, but turns out I didnt:

It says the answer is B

but isnt that a part of the current account (current transfers)? Please correct my ignorance

Thanks

 

[lynton]

by the process of elimination it would turn out to be B as the other choices would be located on the current account and foreign aid is the only suitable one on the capital and financial account. Hope im write if not please do tell
and in answer to your question, foreign aid is located on the capital account under capital transfers

 

[darshil]

Thanks for the help man, really appreciate it. I guess it could be a non commercial record in captial account yeah!

 

[gnrlies]

Actually foreign aid can be in both the CAD and the K&FA. It just depends on the nature of the aid.

if it is a lum sum transfer (i.e. Australia giving 10 billion dollars to a country to do what they wish) then it goes in the CAD because it is a non reversible transaction.

When aid is earmarked for a certain project, it goes in the K&FA because the Australian government has purchased the an asset in a foreign country. It is actually a reversible transaction (and therefore in the K&FA) because if for example the Australian gov build a hospital ; they could potentially sell it down the track.

 

[darshil]

ahhhh, gotchya gnrlies, thanks

 

[random-1005]

I was trying these out, and seriously thought I got them, but turns out I didnt:

It says the answer is B

but isnt that a part of the current account (current transfers)? Please correct my ignorance

Thanks

current transfer is for "aid of non capital nature" such as pensions.

whereas the capital AC contains aid of capital nature (ie aid for the provision of capital goods, such as roads, machines etc.

 

[darshil]

thanks for the reply man appreciate it

 

[lynton]

someones smart then

 

[darshil]

sorry?