Question 1 (20pts) 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.
Question 1 (20pts) 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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 1 (20pts)
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.
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