Answered: When natural disasters like a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

When natural disasters like a hurricane, tsunami, or earthquake occur in other countries of the world, Americans donate to help the victims of such disasters. These donations

A) Are part of export services recorded in the balance of payments account

B) Are part of import services recorded in the balance of payments account

C) Are part of net transfers recorded in the balance of payments account

Expert Solution

Step 1

The balance of payments (BoP) keeps track of all economic exchanges of goods, services, and assets between a nation and the rest of the globe over a given period, often a year. It can be described as the nation's systematic accounting balance sheet, which contains both debit and credit activities. It focuses on all of the exports and imports of commodities and services throughout a certain period. It assists the government in analyzing the potential for export growth in a given industry and developing policies to facilitate such growth.

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