Question

Identify how the following transaction would enter the U.S. balance of payments accounts. Do not be concerned with possible offsetting transactions.

Transaction:
The U.S. government sells F—16 fighter planes to a foreign government

Answer 1

The sale of F-16 fighter planes to a foreign government would enter the U.S. balance of payments accounts as an export in the current account.

Step-by-step explanation:

The transaction of the U.S. government selling F-16 fighter planes to a foreign government would enter the U.S. balance of payments accounts as an export in the current account. Specifically, it would be recorded under the subcategory of goods exports, since it involves the sale of physical goods (fighter planes) to a foreign country. This would contribute to a surplus in the current account balance, indicating that the value of U.S. exports exceeds the value of U.S. imports.