Question

1. For each of the following actions, indicate which of the international accounts would be affected by the action. If an account has more than one part, indicate the part of the account. A Japanese firm sells stocks (equity) to a Brazilian citizen.

1. A Japanese individual buys French wine.
2. The Japanese government provides funds to educate children in Syrian refugee camps in Europe.
3. A Japanese firm purchases “cloud computing” services from a US firm.
4. A Tokyo restaurant pays their chef, a citizen of France.
5. A Japanese individual buys stock in a Chinese firm.

Just need to answer which account will be influenced，such as capital account，current account，finicial account

Answer 1

A Current account records the flow of goods and services in and out of a country including tangible good , services fees, tourism and money sent directly to other country either as aid or sent to families.

A Capital account records the flow of goods and services in out of the country.

Financial account measures increases or decreases in international ownership assets.

a) It is an example of Current account as export has been made to Japan therefore it will be recorded on debit side of Japan of the current account.

b) It is a part of transfer payment (current transfer )so it will be a part of current account and will be recorded onebit side as it has resulted in outflow of cash.

c) Purchase of services from a foreign country will be recorded on debit side of Current account.

d) Part of current account and to be recorded on debit side by the Tokyo restaurant.

e) Direct investment Abroad,Our resident (Japan ) buying ownership stake in Chinese firm then we have to make payment to those foreigners (Chinese) therefore it will have a negative sign and will be recorded in Financial account.

Answer 2

Here's a breakdown of the international accounts that would be affected by each action:

1. A Japanese firm sells stocks (equity) to a Brazilian citizen:

• Financial Account: The sale of stocks represents a financial transaction between the Japanese firm and the Brazilian citizen, affecting the financial account.

2. A Japanese individual buys French wine:

• Current Account: The purchase of goods (French wine) by the Japanese individual from a foreign country (France) affects the current account, specifically the merchandise trade balance.

3. The Japanese government provides funds to educate children in Syrian refugee camps in Europe:

• Current Account: The provision of funds by the Japanese government represents a transfer payment, which affects the current account.

4. A Japanese firm purchases "cloud computing" services from a US firm:

• Current Account: The purchase of services (cloud computing) by the Japanese firm from a foreign country (the US) affects the current account, specifically the services trade balance.

5. A Tokyo restaurant pays their chef, a citizen of France:

• Current Account: The payment made by the Tokyo restaurant to the French chef for services rendered affects the current account, specifically the services trade balance.

6. A Japanese individual buys stock in a Chinese firm:

• Financial Account: The purchase of stocks in a foreign company (Chinese firm) by the Japanese individual represents a financial transaction, affecting the financial account.

In summary, the accounts affected by the actions are:

• Financial Account: Actions 1 and 6.

• Current Account: Actions 2, 3, 4, and