Classifying BOP transactions by goods and services

Steps:

• Australian family's holiday to New Zealand: Residents buying foreign travel services credits New Zealand's exports, debiting Australia's services account as an import.
• Australian mining company's coal sale to China: Goods exported abroad credit Australia's goods account as an export.
• Australia's current account records goods exports/imports and services exports/imports separately.
• Thus, the transactions are a service import and a goods export.

Why C is correct:

• Per IMF Balance of Payments Manual, travel spending by residents abroad is a service import (debit to current account), while goods sold to foreigners are exports (credit).

Why the others are wrong:

• A: Holiday is not a service export (Australians aren't selling services abroad).
• B: Holiday is not a service export, and coal is not a good import (Australia sells, doesn't buy it).
• D: Coal sale is not a good import (it's an export from Australia).

Final answer: C