Transactions affect the current account balance

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How does each of the following transactions affect (1) the current account balance and (2) the capital account balance for Australia? Show that in each case the identity that the trade balance plus net capital inflows equals zero applies. a. An Australian exporter sells software to Israel. She uses the Israeli shekels received to buy stock in an Israeli company. b. An East Timorese firm uses proceeds from its sale of oil to Australia to buy Australian government bonds c. An East Timorese firm uses proceeds from its sale of oil to Australia to buy oil-drilling equipment from an Australian firm d. An East Timorese firm receives Australian dollars from selling oil to Australia. A French firm accepts the dollars as payment for drilling equipment. The French firm uses the dollars to buy Australian government bonds. e. A British financial investor writes a cheque on his bank account in New York to purchase AMP shares.

Reference no: EM131166293

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