Chapter_13_Balance_of_Payments

An american tourist drinking in a foreign wine bar is

Info icon This preview shows pages 40–44. Sign up to view the full content.

View Full Document Right Arrow Icon
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. CA: Drinks in Paris bar - IM - $110 FA: Bar’s claim on AMEX +EXHA +$110
Image of page 40

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
How the Balance of Payments Accounts Work 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 FA: George buys French stock - IMFA - $10,000 FA: BNP claim against Citibank +EXHA +$10,000
Image of page 41
How the Balance of Payments Accounts Work 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. CA: George’s charitable gift - UTOUT - $5,000 CA: Relief supplies exported to Iraq +EX +$5,000
Image of page 42

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
How the Balance of Payments Accounts Work 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. KA: U.S. grant debt relief - KAOUT - $1,000,000,000 FA: Decline in U.S. external assets +EXFA +$1,000,000,000
Image of page 43
Table 16.3 The U.S. Balance of Payments in 2009
Image of page 44
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern