Question

Vietnamese citizens went working in Korea. They sent their income back to the families in Vietnam, worth of $678,000. Which account is affected?; how do you record this into the US BoP?

Answer 1

Answer:

a. Current Account.

b. A credit to the Current Account.

Explanation:

When people go to another country for work and send the income they make back to their country of origin as remittances, this goes to the Current Account of a nation's Balance of Payments.

It would be recorded as a credit to this account because when money goes out, it goes to the credit side of the U.S. BOP as it is being exported out so is leaving the economy of the U.S.