Capital/Financial Account

Question 1

what does the capital account deal with + examples

Answer 1

aquisition and disposal of non produced, non financial assets (intangible assets, patents, copyrighhts, trademarks)

Question 2

what are some exmples of capital transfers

Answer 2

migrants funds, aid related capital

Question 3

what is the financial account comprised of (2)

Answer 3

net foreign investment

records export/import of currency associated with foreign investment and trade

Question 4

what are the 4 types of transactions in the FA

Answer 4

1. direct investment (+1.4)
2. Portfolio investment (-11)
3. Reserve Assets
4. Other Investment

Question 5

what is direct investment and why do people do it

Answer 5

if a resident investor obtain 10% or more of the equity of a foreign enterprise (shares) to secure influence in foreign firm management

Question 6

what is portfolio investment

Answer 6

international equity/debit securties (bonds and notes) no classified as direct investment <10% equity

Question 7

what are reserve assets

Answer 7

financial assets controlled by RBA (gold and foreign exchange)

Question 8

what happens when there if FAS

Answer 8

Aus is drawing on foreign investment more than it invests abroad

Question 9

what happens when there is FAD

Answer 9

Aus is lending its excess savings to the rest of the world more than the world is investing in Aus