Explain how each of the following transactions generates two entries–a credit and a debit–in the Japanese balance of payments accounts, and describe how each entry would be classified: a. A Japanese investor buys a share of a stock company in Thailand, paying by writing a check on an account with a Singapore bank. Second, a Japanese investor buys a share of a Thai stock company, paying the seller with a check on a Japanese bank. Third, a Japanese-owned factory in Germany uses local earnings to buy additional machinery. b. The Malaysian government carries out an official foreign exchange intervention in which it uses yen held in a Japanese bank to buy ringgit (Malaysian currency) from its citizens. c. A tourist from Kyoto buys a meal at an expensive restaurant in Bangkok, paying with a traveler’s check.
Explain how each of the following transactions generates two entries–a credit and a debit–in the Japanese balance of payments accounts, and describe how each entry would be classified: a. A Japanese investor buys a share of a stock company in Thailand, paying by writing a check on an account with a Singapore bank. Second, a Japanese investor buys a share of a Thai stock company, paying the seller with a check on a Japanese bank. Third, a Japanese-owned factory in Germany uses local earnings to buy additional machinery. b. The Malaysian government carries out an official foreign exchange intervention in which it uses yen held in a Japanese bank to buy ringgit (Malaysian currency) from its citizens. c. A tourist from Kyoto buys a meal at an expensive restaurant in Bangkok, paying with a traveler’s check.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Explain how each of the following transactions generates two entries–a credit and a debit–in the Japanese balance of payments accounts, and describe how each entry would be classified:
a. A Japanese investor buys a share of a stock company in Thailand, paying by writing a check on an account with a Singapore bank. Second, a Japanese investor buys a share of a Thai stock company, paying the seller with a check on a Japanese bank. Third, a Japanese-owned factory in Germany uses local earnings to buy additional machinery.
b. The Malaysian government carries out an official foreign exchange intervention in which it uses yen held in a Japanese bank to buy ringgit (Malaysian currency) from its citizens.
c. A tourist from Kyoto buys a meal at an expensive restaurant in Bangkok, paying with a traveler’s check.
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