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Assignment1 answers - ANSWERS ECN 306 Assignment 1: Balance...

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ANSWERS ECN 306 Assignment 1: Instructions: Please try to answer each question as fully as possible. Save a copy of your work . The assignment is due on or before the end of class on February 11. 1.) Show how the following transactions would be recorded as debits or credits on the US balance of payments accounts. Identify the amount, whether it is a credit or a debit and on which account it would be recorded (be as specific as possible in identifying account – i.e., be more precise than a simple current account/capital account distinction). A.) A US tourist spends $100 in Mexico renting a fishing boat and the Mexican owner buys $100 of spare parts for the boat from a US company. $100 credit on the merchandise exports section of the current account , $100 debit on the tourism section of the current account B.) A German investor sells her holdings of General Motors stock and deposits the $5000 she receives for the stock in her US bank account. $5000 credit on the “foreigners deposits in US banks” or short term part of the capital account, $5000 debit on the long term part of the capital account. C.) General Electric receives a dividend of $5 million from its Brazilian subsidiary and uses the money to purchase an electronics distribution firm in Australia. $5 million
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This note was uploaded on 05/05/2010 for the course ECONOMICS ecn 306 taught by Professor Brada during the Spring '10 term at ASU.

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Assignment1 answers - ANSWERS ECN 306 Assignment 1: Balance...

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