Exercise 1.1: Balance of Payments Accounting Describe how each of the following transactions affects the U.S. Balance of Pay- ments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.) [Note: these questions are slightly different to the most recent version of the S-GUW text- book. You can look at both. More questions are also available in Appleyard and Field] 1. An American university buys several park benches from Spain and pays with a $120 000 check. 2. Floyd Townsend, of Tampa Florida, buys 5,000.00 dollars worth of British Airlines stock from Citibank New York, paying with U.S. dollars. 3. A French consumer imports American blue jeans (US$ 100.00) and pays with a check drawn on a U.S. bank in New York. 4. An American company sells a subsidiary in the United States and with the proceeds buys a French company (both worth US$ 1.00). 5. A group of American friends travels to Costa Rica and rents a vacation home for $2,500. They pay with a U.S. credit card. 6. The United States sends medicine, blankets, tents, and non-perishable food worth 400 dollars to victims of an earthquake in a foreign country. The following two transactions involve a component of the balance of payments that uwe have ignored because it is quantitatively insignificant (for the U.S.). 1 7. A billionaire from Russia 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 Russia is estimated to be about 200 U.S. dollars. 8. The United States forgives debt of $500 to Nicaragua.
Exercise 1.1: Balance of Payments Accounting Describe how each of the following transactions affects the U.S. Balance of Pay- ments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.) [Note: these questions are slightly different to the most recent version of the S-GUW text- book. You can look at both. More questions are also available in Appleyard and Field] 1. An American university buys several park benches from Spain and pays with a $120 000 check. 2. Floyd Townsend, of Tampa Florida, buys 5,000.00 dollars worth of British Airlines stock from Citibank New York, paying with U.S. dollars. 3. A French consumer imports American blue jeans (US$ 100.00) and pays with a check drawn on a U.S. bank in New York. 4. An American company sells a subsidiary in the United States and with the proceeds buys a French company (both worth US$ 1.00). 5. A group of American friends travels to Costa Rica and rents a vacation home for $2,500. They pay with a U.S. credit card. 6. The United States sends medicine, blankets, tents, and non-perishable food worth 400 dollars to victims of an earthquake in a foreign country. The following two transactions involve a component of the balance of payments that uwe have ignored because it is quantitatively insignificant (for the U.S.). 1 7. A billionaire from Russia 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 Russia is estimated to be about 200 U.S. dollars. 8. The United States forgives debt of $500 to Nicaragua.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Any help with that exercise using the template attached please
![Exercise 1.1: Balance of Payments Accounting
Describe how each of the following transactions affects the U.S. Balance of Pay-
ments.
(Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.)
[Note: these questions are slightly different to the most recent version of the S-GUW text-
book. You can look at both. More questions are also available in Appleyard and Field]
1. An American university buys several park benches from Spain and pays with a $120
000 check.
2. Floyd Townsend, of Tampa Florida, buys 5,000.00 dollars worth of British Airlines
stock from Citibank New York, paying with U.S. dollars.
3. A French consumer imports American blue jeans (US$ 100.00) and pays with a check
drawn on a U.S. bank in New York.
4. An American company sells a subsidiary in the United States and with the proceeds
buys a French company (both worth US$ 1.00).
5. A group of American friends travels to Costa Rica and rents a vacation home for $2,500.
They pay with a U.S. credit card.
6. The United States sends medicine, blankets, tents, and non-perishable food worth 400
dollars to victims of an earthquake in a foreign country.
The following two transactions involve a component of the balance of payments that we
have ignored because it is quantitatively insignificant (for the U.S.).
1
7. A billionaire from Russia 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 Russia is estimated to be about 200 U.S. dollars.
8. The United States forgives debt of $500 to Nicaragua.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87b53351-2067-4a4d-a81c-a5cf0ffaa5a8%2Fbd5b8b77-8390-4c43-a8e3-532ef119daf6%2Fbjw7bii_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 1.1: Balance of Payments Accounting
Describe how each of the following transactions affects the U.S. Balance of Pay-
ments.
(Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.)
[Note: these questions are slightly different to the most recent version of the S-GUW text-
book. You can look at both. More questions are also available in Appleyard and Field]
1. An American university buys several park benches from Spain and pays with a $120
000 check.
2. Floyd Townsend, of Tampa Florida, buys 5,000.00 dollars worth of British Airlines
stock from Citibank New York, paying with U.S. dollars.
3. A French consumer imports American blue jeans (US$ 100.00) and pays with a check
drawn on a U.S. bank in New York.
4. An American company sells a subsidiary in the United States and with the proceeds
buys a French company (both worth US$ 1.00).
5. A group of American friends travels to Costa Rica and rents a vacation home for $2,500.
They pay with a U.S. credit card.
6. The United States sends medicine, blankets, tents, and non-perishable food worth 400
dollars to victims of an earthquake in a foreign country.
The following two transactions involve a component of the balance of payments that we
have ignored because it is quantitatively insignificant (for the U.S.).
1
7. A billionaire from Russia 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 Russia is estimated to be about 200 U.S. dollars.
8. The United States forgives debt of $500 to Nicaragua.
Transcribed Image Text:Category
Export of goods
Import of goods
Merchandise trade balance
Export of services
Import of services
Balance on goods and services
Factor income receipts from abroad
Factor income payments abroad
Balance on goods, services and investment income
Unilateral transfers received
Unilateral transfers made
Balance on current account (current account balance)
II
Net increase in foreign long-term assets domestically
Net increase in long term asset abroad
Net increase in foreign short-term private assets domestically
Net increase in short-term private assets abroad
Official reserve transactions balance (overall balance)
III
Net increase in foreign short-term official assets domestically
Net increase in official reserves assets or official assets abroad
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