2. The Balance of Payments (BOP) measures all international transactions between two countries. The chart below shows six different transactions between the US and China United States China Purchased $800 of goods and services Sent $100 of humanitarian aid Chinese tourists spend $1000 in the US Purchased'$300 of goods and services Chinese purchased a $600 business in the US Chinese government purchased US. bonds Americans spent $200 in Chinese stock market American tourists spend $1000 in China Which country has a trade deficit and which has a trade surplus? Explain how you got your answer and calculate the value of each a. b. Assuming these are all the transactions between these two countries, calculate the value of the current accounts for each country. Explain why one will have a current account deficit and the other will have a current account surplus. c. Calculate the dollar value of US bonds held by the Chinese government. Explain how you determined your answer. Identify the relationship between financial inflows and outflows for each country- red to the US. In general, explain what

2. The Balance of Payments (BOP) measures all international transactions between two countries. The chart below shows six different transactions between the US and China United States China Purchased $800 of goods and services Sent $100 of humanitarian aid Chinese tourists spend $1000 in the US Purchased'$300 of goods and services Chinese purchased a $600 business in the US Chinese government purchased US. bonds Americans spent $200 in Chinese stock market American tourists spend $1000 in China Which country has a trade deficit and which has a trade surplus? Explain how you got your answer and calculate the value of each a. b. Assuming these are all the transactions between these two countries, calculate the value of the current accounts for each country. Explain why one will have a current account deficit and the other will have a current account surplus. c. Calculate the dollar value of US bonds held by the Chinese government. Explain how you determined your answer. Identify the relationship between financial inflows and outflows for each country- red to the US. In general, explain what

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Please help me with this macroeconomics question! 2

2. The Balance of Payments (BOP) measures all international transactions between two countries. The chart
below shows six different transactions between the US and China
United States
China
Purchased $800 of goods and services
Sent $100 of humanitarian aid
Americans spent $200 in Chinese stock market
American tourists spend $1000 in China
Chinese tourists spend $1000 in the US
Purchased $300 of goods and services
Chinese purchased a $600 business in the US
Chinese government purchased US. bonds
Which country has a trade deficit and which has a trade surplus? Explain how you got your answer
and calculate the value of each
a.
b. Assuming these are all the transactions between these two countries, calculate the value of the
current accounts for each country. Explain why one will have a current account deficit and the other
will have a current account surplus.
Calculate the dollar value of US bonds held by the Chinese government. Explain how you
determined your answer. Identify the relationship between financial inflows and outflows for each
с.
countrys
d. Assume that China experience significant inflation compared to the US. In general, explain what
would likely happen to the current accounts for each country and the value of each country's
currency?
e. Assume instead that the interest rate increase in China compared to the US. In general, explain what
would likely happen to financial accounts for each country and the value of each country's currency?

Branch of economics that analyzes the behavior and performance of an economy as a whole. It focuses on the study of aggregates and evaluates changes related to unemployment, gross domestic product, inflation, monetary and fiscal policies of the government.

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