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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

(a) United states donates footballs to Japan. Debit: Net unilateral transfers and credit : Merchandise trade.

(b) U.S sells computers to Russia and uses the proceeds to buy shares of stocks in Russian companies. Then , U.S trade balance rises and U.S capital account falls. Debit: Capital account and exports rises.

(c) A U.S collector buys some ancient artifacts from a collection in Egypt. Entry of this in capital and financial account . Debit: capital account.

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