Question

Can anyone do a, b, and c??

JUU dived to this conclusion. 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.

Answer 1

Solution

a.US manufacturer imports $200,000 in parts from German Firm.It uses US bank account to pay for the parts

"Imports " under Current Account increases by $200,000.

Transaction	Credit	Debit
Importing parts		$200,000

b.Bank in Switzerland buys $2 million in US treasury bonds from American securities firm

It comes under " Foreign Direct Investment " in the United States which gets credited as cash flows into the US

Transaction	Credit	Debit
Foreign Bank purchasing bonds of the US	$2,000,000

c.A French Tourist charges $500 to his Mastercard for a hotel stay in Atlanta

Since money is received in return for a service that is provided to the foreigner (i.e., hotel service was offered by a US hotel),it is treated as an export. Mastercard is also a US company.

Transaction	Credit	Debit
Tourist charges amount to his Mastercard for a hotel stay	$500

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