Show how each of the following would affect the U.S. balance of payments. Include a description of the debit and credit items, and in each case identify which specific account is affected (e.g., imports of goods and services, IM; exports of assets, EXA; and so on. a) A U.S. citizen buys a newly issued stock share in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York. b) An American buys a Japanese car, paying by writing a check on an account with a New York bank. d) A French firm sells defense equipment to the British government for 250 million pounds in bank deposits. Please draw a table like i have shown in the sample image (including the arrows indicate the increase or decrease) and explain a bit (if possible can u elaborate a little bit more because i want to understand)
Show how each of the following would affect the U.S. balance of payments. Include a description of the debit and credit items, and in each case identify which specific account is affected (e.g., imports of goods and services, IM; exports of assets, EXA; and so on. a) A U.S. citizen buys a newly issued stock share in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York. b) An American buys a Japanese car, paying by writing a check on an account with a New York bank. d) A French firm sells defense equipment to the British government for 250 million pounds in bank deposits. Please draw a table like i have shown in the sample image (including the arrows indicate the increase or decrease) and explain a bit (if possible can u elaborate a little bit more because i want to understand)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Show how each of the following would affect the U.S. balance of payments. Include a description of the debit and credit items, and in each case identify which specific account is affected (e.g., imports of goods and services, IM; exports of assets, EXA; and so on.
a) A U.S. citizen buys a newly issued stock share in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York.
b) An American buys a Japanese car, paying by writing a check on an account with a New York bank.
d) A French firm sells defense equipment to the British government for 250 million pounds in bank deposits.
Please draw a table like i have shown in the sample image (including the arrows indicate the increase or decrease) and explain a bit (if possible can u elaborate a little bit more because i want to understand)
Transcribed Image Text:a. A California computer manufacturer purchases a $50 hard disk from a Malaysian company,
paying the funds from a bank account in Malaysia.
Description
Hard disk imported from
Malaysia
Decrease in Malaysian deposits
owned by U.S. firm
BOP Account
CA (↓)
FA (1)
Account (detail) Credit/Debit
-IM (↑), TB (↓) -$50
-IMFA (↓)
+$50
***The purchasing of disk is a debt entry in CA due to import. The reduction in deposits held in
Malaysia decreases the foreign asset held by American is recorded in the FA as a credit entry.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education