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Explain how each of the following transactions would enter the U.S. balance of payments account. Discuss...

Explain how each of the following transactions would enter the U.S. balance of payments account. Discuss only the transactions described. Do not be concerned with possible offsetting transactions.

a. United States donates footballs to Japan.

b. United States sells computers to Russia and uses the proceeds to buy shares of stocks in Russian companies

c. A U.S. collector buys some ancient artifacts from a collection in Egypt.

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Answer #1

The Balance of Payment refers to a country's systemic records of all the financial transactions related to international trade.The BOP format comprises two types of transitions Debit and Credit Side. Debit transactions show outflow of cash and Credit side shows the inflow of the cash.

a) Donations of football come under unilateral transfers.It is shown on the credit side of the BOP

b) The transaction included in the credit side of BOP export of th goods.

c) The transaction includes Debit side because payment is made to the foreigner.

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