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3. Consider the following international transactions, which together make up all the transaction of the United States with the rest of the world and compile the Balance of Payments Accounts. For each transaction below, enter its value and sign, and whethe it belongs to the current or financial accounts. a. The export of wine from California to France for $100, paid for with US dollars that the French importer holds at home in a box. b. The import of a BWM for $200 from Germany, paid for with euros that the American importer held in bank account in Frankfurt. c. What is the Current Account Balance resulting from a and b? What is the Financial Account Balance? Is there a Balance of Payments deficit? A surplus?

3. Consider the following international transactions, which together make up all the transaction of the United States with the rest of the world and compile the Balance of Payments Accounts. For each transaction below, enter its value and sign, and whethe it belongs to the current or financial accounts. a. The export of wine from California to France for $100, paid for with US dollars that the French importer holds at home in a box. b. The import of a BWM for $200 from Germany, paid for with euros that the American importer held in bank account in Frankfurt. c. What is the Current Account Balance resulting from a and b? What is the Financial Account Balance? Is there a Balance of Payments deficit? A surplus?

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Open-economy Macroeconomics: Basic Concepts
Section: Chapter Questions
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3. Consider the following international transactions, which together make up all the transaction of the United States with the rest of the world and compile the Balance of Payments Accounts. For each transaction below, enter its value and sign, and whether it belongs to the current or financial accounts. a. The export of wine from California to France for $100, paid for with US dollars that the French importer holds at home in a box. b. The import of a BWM for $200 from Germany, paid for with euros that the American importer held in bank account in Frankfurt. c. What is the Current Account Balance resulting from a and b? What is the Financial Account Balance? Is there a Balance of Payments deficit? A surplus? Now suppose that the importer of the BMW only has $100 worth of euros available, and purchases the remaining $100 worth of euros directly from the Federal Reserve. d. Repeat the recording of the transaction described in parts b. Have the Balance-of- Payments deficit or surplus been affected? Explain.
Transcribed Image Text:3. Consider the following international transactions, which together make up all the transaction of the United States with the rest of the world and compile the Balance of Payments Accounts. For each transaction below, enter its value and sign, and whether it belongs to the current or financial accounts. a. The export of wine from California to France for $100, paid for with US dollars that the French importer holds at home in a box. b. The import of a BWM for $200 from Germany, paid for with euros that the American importer held in bank account in Frankfurt. c. What is the Current Account Balance resulting from a and b? What is the Financial Account Balance? Is there a Balance of Payments deficit? A surplus? Now suppose that the importer of the BMW only has $100 worth of euros available, and purchases the remaining $100 worth of euros directly from the Federal Reserve. d. Repeat the recording of the transaction described in parts b. Have the Balance-of- Payments deficit or surplus been affected? Explain.
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