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What Counts on the U.S. Balance of Payments

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How will the following transactions be reflected in the U.S. balance of payments?

a. A U.S. MNC sells $5 million in automotive parts to a firm in Italy, receiving a check drawn on the Italian company's U.S. bank account.

b. A Japanese corporation purchases a plant in the United States for $200 million, using the proceeds of a loan from a U.S. bank.

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Solution Summary

This discusses the impact of various transactions on U.S. balance of payments in 177 words with a short introduction on the components of the Balance of Payments.

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Balance of payment may be defined as systematic record of all economic transactions between a resident of the country and the rest of the world during the given period. The three main components of the Balance of Payments are:

1. The Current Account ...

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