Please help me with 4 and 7. Thank you 4. Show (using the credit/debit tables) how each of the following would affect theU. S. Balance Of Payment. Your records should include a description of the transactionbeing recorded, which specific account is affected, and the accompanying credit/debitentry.a. A U. S. airplane manufacturer imports $600,000 in parts from a Canadian firm. It usesa U. S. bank account to pay for the parts.b. The Bank of England (U.K. central bank) buys $2 million in U. S. Treasury bonds froman American securities firm. c. An Italian tourist charges $400 to his Mastercard (issued by an Italian bank) for a hotel room in New York City.d. A Chinese catering company purchases $30,000 in helium tanks from a U. S. weldingfirm. The Chinese catering company uses deposits from a bank in China.e. A French firm forgives a $250,000 loan to an oil refinery located in Louisianafollowing a hurricane. 7. During the 1980s, the United States experienced “twin deficits” in the current account andgovernment budget. Since 1998 the U.S. current account deficit has grown steadily along withrising government budget deficits. Do government budget deficits lead to current accountdeficits? Identify other possible sources of the current account deficits. Do current accountdeficits necessarily indicate problems in the economy?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please help me with 4 and 7. Thank you

4. Show (using the credit/debit tables) how each of the following would affect the
U. S. Balance Of Payment. Your records should include a description of the transaction
being recorded, which specific account is affected, and the accompanying credit/debit
entry.
a. A U. S. airplane manufacturer imports $600,000 in parts from a Canadian firm. It uses
a U. S. bank account to pay for the parts.
b. The Bank of England (U.K. central bank) buys $2 million in U. S. Treasury bonds from
an American securities firm.

c. An Italian tourist charges $400 to his Mastercard (issued by an Italian bank) for a hotel

room in New York City.
d. A Chinese catering company purchases $30,000 in helium tanks from a U. S. welding
firm. The Chinese catering company uses deposits from a bank in China.
e. A French firm forgives a $250,000 loan to an oil refinery located in Louisiana
following a hurricane.

7. During the 1980s, the United States experienced “twin deficits” in the current account and
government budget. Since 1998 the U.S. current account deficit has grown steadily along with
rising government budget deficits. Do government budget deficits lead to current account
deficits? Identify other possible sources of the current account deficits. Do current account
deficits necessarily indicate problems in the economy?

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