Describe how each of the following transactions affects the U.S. Balance of Payments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.) (a) A French consumer imports American jeans and pays with a check drawn on a U.S. bank in Philadelphia. (b) An American company sells computer software to Costa Rica and receives a money order of $120,000. (c) A citizen from Italy enters the United States on an immigrant visa (that is, upon entering the United States she becomes a permanent resident of the United States). Her wealth in Italy is estimated to be about 1.5 billion U.S. dollars. (d) Frank Rogers, of Durham, buys 2,300.00 dollars of stocks from the German car maker BMW, from Citibank New York, paying with U.S. dollars. (e) An American company sells a subsidiary in the United States and with the proceeds buys a Romanian company. (f) The United States forgives debt of $3,200,000 to Canada. (g) An American family travels to Mallorca and rents a boat for $1,500 for a week. They pay with a U.S. credit card. (h) New Orleans residents receive medicine, blankets and tents worth 7 million dollars from Australia for help over hurricane.
Describe how each of the following transactions affects the U.S. Balance of Payments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.)
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(a) A French consumer imports American jeans and pays with a check drawn on a U.S. bank in Philadelphia.
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(b) An American company sells computer software to Costa Rica and receives a money order of $120,000.
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(c) A citizen from Italy enters the United States on an immigrant visa (that is, upon entering the United States she becomes a permanent resident of the United States). Her wealth in Italy is estimated to be about 1.5 billion U.S. dollars.
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(d) Frank Rogers, of Durham, buys 2,300.00 dollars of stocks from the German car maker BMW, from Citibank New York, paying with U.S. dollars.
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(e) An American company sells a subsidiary in the United States and with the proceeds buys a Romanian company.
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(f) The United States forgives debt of $3,200,000 to Canada.
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(g) An American family travels to Mallorca and rents a boat for $1,500 for a week. They pay with a U.S. credit card.
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(h) New Orleans residents receive medicine, blankets and tents worth 7 million dollars from Australia for help over hurricane.
An international market is known for the trade between various nations. It means that when two or more nations are involved in the exchange of products and services and various economic relations, then it is known as international trade. International trade leads to building up economic relations among the nations involved. International transactions are represented in the balance of payments account, which is separate for every nation.
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