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The balance of payments records all economic transactions between a country and the rest of the world. The current account includes trade in goods and services, net income, and transfers. The financial account records capital flows. The accounts must balance: current account + financial account = 0.
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Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
Which of the following transactions would be recorded as a credit (+) in the U.S. Current Account?
A U.S. resident purchases a smartphone made in South Korea.
A U.S. company pays dividends to a foreign shareholder.
A French tourist spends money visiting national parks in the U.S.
A U.S. investor buys bonds issued by the Japanese government.
The U.S. government sends foreign aid to another country.
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.