Question

Show how each of the following would affect the U.S. balance of payments. Include a description of the debit and credit items, and in each case state which specific account is affected: the current account (CA), the capital account (KA), the non-reserve financial account (F ANR), or the official settlements balance (OSB)?

(a) (3 points)A California computer manufacturer purchases a$50 hard disk from a Malaysian company, paying the funds from a bank account in Malaysia.

b) (3 points)A U.S. tourist to Japan sells his iPod to a local resident for yen worth $100.

c) (3 points)The U.S. central bank sells$500 million of its holdings of U.S. Treasury bonds to a British financial firm and purchases pound sterling foreign reserves.

d) 3 points)The U.S. government forgives a$50 million debt owed by a developing country.

Answer 1