Balance of payments accounting. For the following international transactions, identify the balance of payments accounts and whether the transaction would generate an inflow or an outflow of foreign exchange for the two countries involved. ■ TIAA-CREF—the pension fund of American college professors—purchases 1 million shares of South Africa’s Standard Bank for $16 million. ■ Air France purchases $2.5 million of jet fuel at Boston’s Logan Airport. Payment is made directly from Air France’s bank account with State Street in Boston. ■ Hong Kong–based Cathay Pacific pays a $25 million annual lease on two Boeing 777s to U.S.-based lessor GE Capital.
Balance of payments accounting. For the following international transactions, identify the balance of payments accounts and whether the transaction would generate an inflow or an outflow of foreign exchange for the two countries involved. ■ TIAA-CREF—the pension fund of American college professors—purchases 1 million shares of South Africa’s Standard Bank for $16 million. ■ Air France purchases $2.5 million of jet fuel at Boston’s Logan Airport. Payment is made directly from Air France’s bank account with State Street in Boston. ■ Hong Kong–based Cathay Pacific pays a $25 million annual lease on two Boeing 777s to U.S.-based lessor GE Capital.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Balance of payments accounting. For the following international transactions, identify the balance of payments accounts and whether the transaction would generate an inflow or an outflow of foreign exchange for the two countries involved.
■ TIAA-CREF—the pension fund of American college professors—purchases 1 million shares of South Africa’s Standard Bank for $16 million.
■ Air France purchases $2.5 million of jet fuel at Boston’s Logan Airport. Payment is made directly from Air France’s bank account with State Street in Boston.
■ Hong Kong–based Cathay Pacific pays a $25 million annual lease on two Boeing 777s to U.S.-based lessor GE Capital.
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