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U.S. foreign aid a debit in the balance of payments what is the offsetting credit

U.S. foreign aid a debit in the balance of payments what is the offsetting credit

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Expert Solution

Balance of payments

The monetary transactions and all payments between a country and other countries in a particular period of time are recorded which is known as balance of payments.

The debits(outflow of foreign exchange) in payment means the payment which arises from the purchase of goods and services produced by the domestic residents from foreign residents. It can be any kind of gift from the foreign residents. This involves the domestic currency exchange in the international currency market for the foreign currency.

The credits(inflow of foreign exchange) are also known as receipts which are achieved from the sale of assets and the goods and services to the foreign residents by the domestic residents. It can be any kind of gifts which are received from the foreign countries. In this case the vise versa happens i.e. the foreign currency gets exchanged for the domestic currency in the foreign exchange market.

Rahul Sunny answered 1 year ago
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