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Balance of payments

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Question 13

An economy records the following three transactions with the rest of the world:

  1. A domestic multinational company receives dividend payments from its overseas subsidiary.
  2. The domestic government pays its annual subscription fee to a global environmental agency.
  3. A domestic logistics firm is paid by a foreign company to transport goods across Europe.

Which row in the table below correctly classifies each of these transactions on the current account of the Balance of Payments?

RowTransaction 1Transaction 2Transaction 3APrimary incomeSecondary incomeTrade in servicesBPrimary incomeTrade in servicesSecondary incomeCSecondary incomePrimary incomeTrade in servicesDSecondary incomeTrade in servicesPrimary income \begin{array}{|c|c|c|c|} \hline \textbf{Row} & \textbf{Transaction 1} & \textbf{Transaction 2} & \textbf{Transaction 3} \\ \hline \text{A} & \text{Primary income} & \text{Secondary income} & \text{Trade in services} \\ \hline \text{B} & \text{Primary income} & \text{Trade in services} & \text{Secondary income} \\ \hline \text{C} & \text{Secondary income} & \text{Primary income} & \text{Trade in services} \\ \hline \text{D} & \text{Secondary income} & \text{Trade in services} & \text{Primary income} \\ \hline \end{array} RowABCD​Transaction 1Primary incomePrimary incomeSecondary incomeSecondary income​Transaction 2Secondary incomeTrade in servicesPrimary incomeTrade in services​Transaction 3Trade in servicesSecondary incomeTrade in servicesPrimary income​​

Row A

Row B

Row C

Row D

Balance of payments Questions

  1. A Level
  2. /Economics
  3. /Balance of payments