11. Which is a current account transaction for Italy?
Answer: C
Export leather to China
Exporting leather to China represents a current account transaction for Italy, as it involves the sale of goods between countries affecting the trade balance.
A) Buy land in Vietnam
Buying land in Vietnam is classified as a capital account transaction, as it involves an investment in foreign real estate rather than a trade of goods or services. This does not impact the current account directly.
B) Buy African parks
Purchasing African parks also falls under capital account transactions, as it pertains to investment rather than trade. Such actions do not contribute to the current account which focuses on goods and services exchanged.
C) Export leather to China
Exporting leather to China is a clear example of a current account transaction, as it involves the sale of a good from Italy to another country, thereby affecting Italy's trade balance.
D) Build factory in Brazil
Building a factory in Brazil is considered a capital account transaction, as it represents a foreign direct investment. This type of transaction does not involve the exchange of goods or services for immediate consumption, thus not impacting the current account.
Conclusion
The correct answer, exporting leather to China, aligns with the definition of a current account transaction, which involves the trade of goods and services. In contrast, the other options are focused on investments or capital transactions that do not pertain to immediate trade, underscoring the importance of differentiating between current and capital account activities.