Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter24: Recording International And Internet Sales
Section: Chapter Questions
Problem 1CP
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Question
Please help me with D and E! Thank you!
![2. The Balance of Payments (BOP) measures all international transactions between two countries. The chart
below shows six different transactions between the US and China
United States
China
Purchased $800 of goods and services
Sent $100 of humanitarian aid
Americans spent $200 in Chinese stock market
American tourists spend $1000 in China
Chinese tourists spend $1000 in the US
Purchased $300 of goods and services
Chinese purchased a $600 business in the US
Chinese government purchased US. bonds
Which country has a trade deficit and which has a trade surplus? Explain how you got your answer
and calculate the value of each
a.
b. Assuming these are all the transactions between these two countries, calculate the value of the
current accounts for each country. Explain why one will have a current account deficit and the other
will have a current account surplus.
Calculate the dollar value of US bonds held by the Chinese government. Explain how you
determined your answer. Identify the relationship between financial inflows and outflows for each
с.
countrys
d. Assume that China experience significant inflation compared to the US. In general, explain what
would likely happen to the current accounts for each country and the value of each country's
currency?
e. Assume instead that the interest rate increase in China compared to the US. In general, explain what
would likely happen to financial accounts for each country and the value of each country's currency?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73e83d85-adf0-4a16-8844-409700f26c2c%2Ff18f5adf-04d1-4e45-b5f6-64ed414c38df%2F82top7i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. The Balance of Payments (BOP) measures all international transactions between two countries. The chart
below shows six different transactions between the US and China
United States
China
Purchased $800 of goods and services
Sent $100 of humanitarian aid
Americans spent $200 in Chinese stock market
American tourists spend $1000 in China
Chinese tourists spend $1000 in the US
Purchased $300 of goods and services
Chinese purchased a $600 business in the US
Chinese government purchased US. bonds
Which country has a trade deficit and which has a trade surplus? Explain how you got your answer
and calculate the value of each
a.
b. Assuming these are all the transactions between these two countries, calculate the value of the
current accounts for each country. Explain why one will have a current account deficit and the other
will have a current account surplus.
Calculate the dollar value of US bonds held by the Chinese government. Explain how you
determined your answer. Identify the relationship between financial inflows and outflows for each
с.
countrys
d. Assume that China experience significant inflation compared to the US. In general, explain what
would likely happen to the current accounts for each country and the value of each country's
currency?
e. Assume instead that the interest rate increase in China compared to the US. In general, explain what
would likely happen to financial accounts for each country and the value of each country's currency?
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