CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

When a German consumer purchases a Canadian chainsaw, this transaction is recorded as a ______.
A. debit on the German current account
B. credit on the German current account
C. debit on the Canadian current account
Explanation: Every international transaction enters the balance of payments twice (once as a credit and once as a debit). One side of the transaction is a debit to the German current account, because it has to do with the import of merchandise. Additionally, the other side of the transaction will eventually result in a credit to the German balance of payments (either the capital or current account), depending on the action of the Canadian company.

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