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Sub-part
A
To Determine: the entry that will be recorded in balance of payments when a Hong Kong financier purchases some U.S corporate stock.
Sub-Part
B
To Determine: the entry that will be recorded in balance of payments when a U.S tourist in paris purchases some perfumes.
Sub-Part
C
To Determine: the entry that will be recorded in balance of payments when a Japanese company sells machinery to a pineapple company in Hawaii.
Sub-Part
D
To Determine: the entry that will be recorded in balance of payments when U.S framers gave food to the children in Ethiopia that were starving.
Sub-Part
E
To Determine: the entry that will be recorded in balance of payments when the U.S Treasury sells a bond to a Saudi Arabian prince.
Sub-Part
F
To Determine: the entry that will be recorded in balance of payments when a U.S tourist flies to France on Air France.
Sub-Part
G
To Determine: the entry that will be recorded in balance of payments when a U.S company sells insurance to a foreign firm.
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Chapter 18 Solutions
ECON MACRO (with MindTap Printed Access Card) (New, Engaging Titles from 4LTR Press)
- Explain where in the U.S. balance of paymentsan entry would be recorded for each of the following:a. A Hong Kong financier buys some U.S. corporate stock.b. A U.S. tourist in Paris buys some perfume to take home.c. A Japanese company sells machinery to a pineapple companyin Hawaii.d. U.S. farmers gave food to starving children in Ethiopia.e. The U.S. Treasury sells a bond to a Saudi Arabian prince.f. A U.S. tourist flies to France on Air France.g. A U.S. company sells insurance to a foreign firm.arrow_forwardWho would demand U.S. dollars in the foreign exchange market? U.S. firms and households wishing to purchase foreign goods and services Foreigners wishing to purchase U.S goods and services U.S. households wishing to purchase U.S. goods and servicesarrow_forwardCritically examine the FIVE types of foreign exchange market participants and identify their motives for buying or selling foreign exchangearrow_forward
- Between 1879 and 1914, the world's major nations adhered to the gold standard. Under the gold standard, a country maintained a fixed relationship between its stock of gold and its money supply. Suppose that Great Britain defined a British pound as 90 grains of gold, and the United States defined $1 as 150 grains of gold. Under the gold standard, a British pound would have been worth $0.60 Suppose the fixed exchange rate is $0.60 per pound. Suppose that an economic expansion in the United States leads to an increase in imports from Great Britain. On the following graph, shift the relevant curve or curves to illustrate the described changes. Then use the black points (cross symbol) to indicate the imbalance. 1.2 0 Supply for pounds 4 Demand for pounds 12 QUANTITY OF POUNDS (Millions) U.S. dollars. 16 Demand for pounds Supply for pounds + The Imbalance (?arrow_forwardwhy, according to some economists, should canada adopt the U.S dollar as its currency?arrow_forwardAssume you have $1,000,000 and are given the following information. What is the triangular arbitrage opportunity? Value of a British Pound in U.S. dollars Value of a Euro in U.S. dollars Value of a British Pound in Euros USD1.80 USD1.25 Euro 1.44arrow_forward
- Suppose that the U.S. dollar appreciates against the Japanese Yen. What will occur as a result? purchasing power parity will begin to hold U.S. exports to Japan will become cheaper and increase, imports from Japan to the U.S. will become more expensive and decline U.S. currency becomes over-valued relative to Japanese currency U.S. exports to Japan will become more expensive and decline, imports from Japan to the U.S. will become cheaper and increasearrow_forwardFind the U.S. dollar value of each of the following currencies at the given exchange rates: a. $1=C$.96(Canadian dollars) b.$1= 81 yen (Japanese Yen) c. $1=A$.95(Australian dollars) d. $1= SKR 6 (Swedish kronor) e. $1=SF .90 (Swiss francs)arrow_forwardWhich of the following will appear on the financial account in the US balance of payments A. U.S. export of wheat to the Philippines B. U.S. import of oil from Venezuela. C. the purchase of shares of a Swiss bank by an American bank. D. all of the abovearrow_forward
- Economic logic may tell us that a country with a higher interest rate, thus a higher rate of return, should be able to attract foreign capital and that a country with a lower interest rate, thus a lower rate of return, should experience an outflow of capital. If a country is experiencing a large net capital inflow its currency is likely to appreciate, while a country experiencing a large net capital outflow would likely see its currency depreciate (assuming a floating exchange rate). However, according to interest rate parity conditions a country with a higher interest rate would see its currency depreciate, while the currency of the lower interest rate country would appreciate. What is the main reason the outcome under interest rate parity conditions? Question 4 options: The assumption that countries have an identical real interest rate The relative interest rate level is not a factor for investment decisions Investors do not seek…arrow_forwardFor each of the following transactions, show the two entries in the US balance of payments. For each entry, indicate whether it appears in CA (the current account) or KFA (the capital and financial account). Show if each entry is a debit (-) or a credit (+). For entries in KFA, choose the appropriate explanation from the following four possibilities: i) increase in US-owned assets abroad (increase in US claims on foreigners), ii) decrease in US-owned assets abroad (decrease in US claims on foreigners), iii) increase in foreign-owned assets in the US (increase in foreign claims on the US), iv) decrease in foreign-owned assets in the US (decrease in foreign claims on the US). A. A US exporter sells a car to a German importer. The importer pays with a dollar denominated check drawn on a US bank account.arrow_forwardExplain the function and structure of the foreign exchange marketarrow_forward
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
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