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

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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. Georges 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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This note was uploaded on 03/02/2012 for the course EC 340 taught by Professor Ballie during the Spring '10 term at Michigan State University.

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