Please help me with D and E! Thank you! 2. The Balance of Payments (BOP) measures all international transactions between two countries. The chartbelow shows six different transactions between the US and ChinaUnited StatesChinaPurchased $800 of goods and servicesSent $100 of humanitarian aidAmericans spent $200 in Chinese stock marketAmerican tourists spend $1000 in ChinaChinese tourists spend $1000 in the USPurchased $300 of goods and servicesChinese purchased a $600 business in the USChinese government purchased US. bondsWhich country has a trade deficit and which has a trade surplus? Explain how you got your answerand calculate the value of eacha.b. Assuming these are all the transactions between these two countries, calculate the value of thecurrent accounts for each country. Explain why one will have a current account deficit and the otherwill have a current account surplus.Calculate the dollar value of US bonds held by the Chinese government. Explain how youdetermined your answer. Identify the relationship between financial inflows and outflows for eachс.countrysd. Assume that China experience significant inflation compared to the US. In general, explain whatwould likely happen to the current accounts for each country and the value of each country'scurrency?e. Assume instead that the interest rate increase in China compared to the US. In general, explain whatwould likely happen to financial accounts for each country and the value of each country's currency?

Current account -It is the country's trade balance i.e., the balance of imports of goods and…

Answered: Please help me with D and E! Thank you!

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Finance

Please help me with D and E! Thank you!

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter24: Recording International And Internet Sales

Section: Chapter Questions

Problem 1CP

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Concept explainers

Balance of Payments

BOP is categorized into the following three components:

Question

Please help me with D and E! Thank you!

2. The Balance of Payments (BOP) measures all international transactions between two countries. The chart
below shows six different transactions between the US and China
United States
China
Purchased $800 of goods and services
Sent $100 of humanitarian aid
Americans spent $200 in Chinese stock market
American tourists spend $1000 in China
Chinese tourists spend $1000 in the US
Purchased $300 of goods and services
Chinese purchased a $600 business in the US
Chinese government purchased US. bonds
Which country has a trade deficit and which has a trade surplus? Explain how you got your answer
and calculate the value of each
a.
b. Assuming these are all the transactions between these two countries, calculate the value of the
current accounts for each country. Explain why one will have a current account deficit and the other
will have a current account surplus.
Calculate the dollar value of US bonds held by the Chinese government. Explain how you
determined your answer. Identify the relationship between financial inflows and outflows for each
с.
countrys
d. Assume that China experience significant inflation compared to the US. In general, explain what
would likely happen to the current accounts for each country and the value of each country's
currency?
e. Assume instead that the interest rate increase in China compared to the US. In general, explain what
would likely happen to financial accounts for each country and the value of each country's currency?

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