Which of the following is not included in the financial account? a. income received from investments made overseas. b. an increase in foreign private asset holdings in Australia. c. an increase in private Australian asset holdings in foreign countries. d. an increase in foreign government asset holdings in foreign countries.
Question
Which of the following is not included in the financial account?
a. income received from investments made overseas.
b. an increase in foreign private asset holdings in Australia.
c. an increase in private Australian asset holdings in foreign countries.
d. an increase in foreign government asset holdings in foreign countries.
Solution
The option that is not included in the financial account is:
d. an increase in foreign government asset holdings in foreign countries.
The financial account in the balance of payments includes investments and transactions that involve financial assets and liabilities. It records the increases or decreases in international ownership of assets, whether they be individuals, businesses, governments, or central banks.
Option d is not included because it refers to transactions between foreign entities in foreign countries, which would not affect the balance of payments of the home country. The financial account only records transactions that involve the home country.
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