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Economics (AS & A Level) · Oct / Nov 2021 · Paper 11 · Question 25

9708Current account of the balance of payments

A resident of country X buys shares in a firm in country Y. The shares then pay the resident a dividend. Where are these two flows recorded in country X's balance of payments?

  1. Apurchase: capital account; dividend: primary income (income)
  2. Bpurchase: capital account; dividend: secondary income (current transfers)
  3. Cpurchase: financial account; dividend: primary income (income)
  4. Dpurchase: financial account; dividend: secondary income (current transfers)

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Correct answer: C. purchase: financial account; dividend: primary income (income)

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