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Balance of payments

8. (Balance of Payments) Explain where in the U.S. balance of payments an entry would be made for each of the following:

a. A Hong Kong financier buys some U.S. corporate stock.
b. A U.S. tourist in Paris buys some perfume to take home.
c. A Japanese company sells machinery to a pineapple company in Hawaii.
d. U.S. farmers make a gift of food to starving children in Ethiopia.
e. The U.S. Treasury sells a bond to a Saudi Arabian prince.
f. A U.S. tourist flies to France on Air France.
g. A U.S. company sells insurance to a foreign firm.

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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. Thus the Balance of Payments 'BOP' is an account of all transactions between one country and all other countries--transactions that are measured in terms of receipts and payments. From the U.S. ...

Solution Summary

This discusses the concept of Balance of payments and its applications