KW_Macro_Ch_19_End_of_Chapter_Problems

KW_Macro_Ch_19_End_of_Chapter_Problems - chapter 19 >...

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>> Open-Economy Macroeconomics chapter 19 1. How would the following transactions be categorized in the U.S. balance of payments accounts? Would they be entered in the current account (as a payment to or from a for- eigner) or the financial account (as a sale to or purchase of assets from a foreigner)? How will the balance of payments on the current and financial accounts change? a. A French importer buys a case of California wine for $500. b. An American who works for a French company deposits her paycheck, drawn on a Paris bank, into her San Francisco bank. c. An American buys a bond from a Japanese company for $10,000. d. An American charity sends $100,000 to Africa to help local residents buy food after a harvest shortfall. 2. In the economy of Scottopia in 2005, exports equaled $400 billion of goods and $300 bil- lion of services, imports equaled $500 billion of goods and $350 billion of services, and the rest of the world purchased $250 billion of Scottopia’s assets. What was the merchandise trade balance for Scottopia? What was the balance of payments on current account in Scottopia? What was the balance of payments on financial account? What was the value of Scottopia’s purchases of assets from the rest of the world? PROBLEMS
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3. In the economy of Popania in 2005, total Popanian purchases of assets in the rest of the world equaled $300 billion, purchases of Popanian assets by the rest of the world equaled
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KW_Macro_Ch_19_End_of_Chapter_Problems - chapter 19 >...

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