homework10 - Department of Economics Spring 2016 Columbia...

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Department of Economics Columbia University Spring 2016 Instructor: Mart´ ın Uribe Homework 10 Economics W3213 Intermediate Macroeconomics Due Wednesday April 20 in class The following questions are slightly edited versions of exercises 1.1 and 1.2 in chapter 1 of SGUW. 1. (Balance of Payments Accounting) Describe how each of the following transactions affects the U.S. Balance of Payments. (Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts.) (a) An American university buys several park benches from Spain and pays with a $120,000 check. (b) Floyd Townsend, of Tampa Florida, buys 5,000.00 dollars worth of British Airlines stock from Citibank New York, paying with U.S. dollars. (c) A French consumer imports American blue jeans and pays with a check drawn on a U.S. bank in New York. (d) An American company sells a subsidiary in the United States and with the proceeds buys a French company. (e) A group of American friends travels to Costa Rica and rents a vacation home for $2,500.
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Unformatted text preview: They pay with a U.S. credit card. (f) The United States sends medicine, blankets, tents, and nonperishable food worth 400 million dollars to victims of an earthquake in a foreign country. 2. Indicate whether the statement is true, false, or uncertain and explain why. (a) The net international investment position of South Africa was -70.5 billion USD in 2010 and -19.7 billion USD in 2011. The current account in 2011 was -10.1 billion USD. There must be an error in the official numbers. The correct ±gure should be a net international investment position of -80.6 billion USD in 2011. (b) The fact that the United States made large valuation gains on average over the past 30 years means that the rest of the world as a whole made equally large valuation losses. After all, this is a zero sum game. (c) The United States has large unrecorded foreign asset holdings. 1...
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