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ch13 (6) - • Example#3 • Using some of the gains on his...

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Example #1 George spends $110 (€100) on French wine. George pays with an American Express card. An American tourist drinking in a foreign wine bar is engaging in the U.S. import of a foreign service. The bar is owed a total of $110 (or the euro equivalent) by American Express (and Amex is owed by George). The U.S. has exported an asset to France: the bar now has a claim against American Express. Example #2 George purchases $10,000 in stock from a French company. Pays for stock by writing a check drawn on his Citibank checking account, payable to a French bank, BNP. French stock imported into the U.S. BNP claim on Citibank account is an export of a home asset to France
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Unformatted text preview: • Example #3 • Using some of the gains on his stock, George donates $5,000 to a charity providing supplies to Iraq. • George’s gift is a unilateral transfer from the U.S. to Iraq. • Relief supplies are exported from the U.S. to Iraq. • Example #4 • George reads about how the U.S. Secretary of State announces it will forgive $1 billion in debt owed by the government of Pakistan. • Debt forgiveness recorded on capital account as charitable gift (asset). • Elimination of debt owed by Pakistan to U.S. decreases U.S. external assets....
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