Question

Can someone please answer?

Question 4) Show using credit/debit table) how each of the following would affect the U.S. Balance of Payments. Include all of the following: - the description of the transaction being recorded, - which specific account is affected and how (for example, CA increase, FA decrease, etc) - the corresponding credit/debit entry. a. A U.S. automobile manufacturer imports $200 000 in parts from a German firm. It uses U.S. bank account to pay for the parts. b. The bank in Switzerland buys $2 million in U.S. Treasury bonds from an American securities firm. C. A French tourists charges $500 to his Mastercard for a hotel stay in Atlanta. d. A Chinese financial company hires a company in New York to design its new building in Shanghai. They pay $500 000 using a deposit at the Bank of China. e. A German Firm forgives $500 000 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. g. You meet you friend from Sweden and exchange a $50 watch produced in U.S. for a $50 MP3 player produced in Sweden.

Answer 1

US BOP

transaction	CA ( US)	FA	Remarks
(A) Import from Germeny	debit entry import from Germeny payment done		import leads to outflow of money from economy.
(B) treasury bond purchased in US	.	Credit entry payment received	foreign investment received by US economy.
(C) hotel stay charges	credit entry payment received		services given leads to increase in inlfow of money.
(D) Payment for building design	Credit entry payment received		chines comany hire the services of new york based firm to design their building in shanghai.
(E) debt foregivness		Credit entry	loan would not be repaid would be consider as transfer payment.
(F)donate	Debit entry payment made for earthquake victims		part of CA as transaction are done for visible, invisible and unilateral transfer and investment income.
(G) gift against gift	no change as both credit and debit entry can be made		unilateral transfer includes gift pension etc again you dont need to pay anythings.