Question

Describe how each of the following transactions affects the U.S. Current Account (increase or decrease in the Trade Balance, Net Payments from Abroad, or Net Unilateral Transfers), and in the external wealth or net foreign assets (increase or decrease)

1. An American university buys several park benches from Spain and pays with a $120,000 check.

2. Floyd Townsend, of Tampa, Florida, buys 5,000.00 dollars worth of British Airlines stock from Citibank New York, paying with U.S. dollars.

3. A French consumer imports American blue jeans and pays with a check drawn on a U.S. bank in New York.

4. An American citizen purchases a 200 dollar Italian bottle of wine in a restaurant in Beverly Hills, CA and pays using his/her credit card.

5. A group of American friends travels to Costa Rica and rents a vacation home for $2,500. They pay with a U.S. credit card.

6. A Japanese insurance company purchases U.S. Treasury bonds and pays out of its bank account kept in New York City

7. A foreign owner of Apple shares receives $10,000 in dividend payments, which are deposited in a New York bank

8. The United States forgives debt of $500,000 to Nicaragua

9. The United States sends medicine, blankets, tents, and nonperishable food worth 400 million dollars to victims of an earthquake in a foreign country

Answer 1