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. d. A Chinese financial company hires a company in New York to design its new building in Shanghai. They pay $500000 using a deposit at the Bank of China. e. A German Firm forgives $500000 loan to an oil refinery in Louisiana following a hurricane. f. The United States donates $5 million in medical and food supplies to Haiti following an earthquake. Please draw a table like the sample image (including arrows which indicate the increase or decrease) and explain a bit under the table (if possible, please elaborate a bit more because i want to understand). Thank you so much.
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. d. A Chinese financial company hires a company in New York to design its new building in Shanghai. They pay $500000 using a deposit at the Bank of China. e. A German Firm forgives $500000 loan to an oil refinery in Louisiana following a hurricane. f. The United States donates $5 million in medical and food supplies to Haiti following an earthquake. Please draw a table like the sample image (including arrows which indicate the increase or decrease) and explain a bit under the table (if possible, please elaborate a bit more because i want to understand). Thank you so much.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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.
d. A Chinese financial company hires a company in New York to design its new building in Shanghai. They pay $500000 using a deposit at the Bank of China.
e. A German Firm forgives $500000 loan to an oil refinery in Louisiana following a hurricane.
f. The United States donates $5 million in medical and food supplies to Haiti following an earthquake.
Please draw a table like the sample image (including arrows which indicate the increase or decrease) and explain a bit under the table (if possible, please elaborate a bit more because i want to understand). Thank you so much.
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.
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