Question

If a U.S. company imports 10 Toyotas from Japan at​ $15,000 each, and the Japanese company...

If a U.S. company imports 10 Toyotas from Japan at​ $15,000 each, and the Japanese company buys airline tickets on a U.S. airline with the​ money, how does this affect the U.S. balance of payments​ accounts?

A.

Decline in financial account​ balance; increase in trade balance

B.

Decline in trade​ balance; decrease in financial account balance

C.

Decline in trade​ balance; increase in financial account balance

D.

No change in trade balance or financial account balance

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans: No change in trade balance or financial account balance.

Explanation:

When U.S. company imports 10 Toyotas from Japan at $15,000 each, this will lead to decline in merchandise trade by $15,000 * 10 = $150,000. And when the Japanese company buys airline tickets on a U.S. airline with the​ money, this will lead to increase in services by $150,000.

So, there will be no change in trade balance or financial account balance.

Thus, option [D] is correct answer.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If US inflation is lower than Japanese inflation Foreign imports from the US will decrease US...
If US inflation is lower than Japanese inflation Foreign imports from the US will decrease US imports from Japan will decrease US Balance of Trade with Japan will decrease US trade deficit with Japan will increase
Question Set 5: Current and Financial Account The table below details current transactions and payments accounts...
Question Set 5: Current and Financial Account The table below details current transactions and payments accounts categories: Transaction Current/Financial Account Increase/Decrease A Chinese company buys equipment produced in the United States. A citizen of Canada donates $1000 to victims of Tropic Storm Cindy. A U.S. citizen buys Boursin cheese produced in France. A Mexican citizen buys 100 shares of Micron stock. U.S. investors buy a golf course in Ireland. Consider each of the transactions above and do the following: Identify...
Describe how each of the following transactions affects the U.S. Current Account (increase or decrease in...
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) An American university buys several park benches from Spain and pays with a $120,000 check. Floyd Townsend, of Tampa, Florida, buys 5,000.00 dollars worth of British Airlines stock from Citibank New York, paying with U.S. dollars. A French consumer imports American...
2. Current, financial, and capital accounts Consider the following table showing hypothetical balance-of-payments data for the...
2. Current, financial, and capital accounts Consider the following table showing hypothetical balance-of-payments data for the United States. Complete the table by selecting the correct value for each missing entry. Balance-of-Payments (Billions of dollars) Current Account U.S. merchandise exports +65 U.S. merchandise imports -68 Merchandise trade balance -3 U.S. service exports +30 U.S. service imports -65    Services balance -35 Goods and services balance -38 Net investment income from abroad -2 Net unilateral transfers -5 Current account balance -45   ...
1. Suppose the U.S. equilibrium price of beef is $2 per kilo and Japan equilibrium price...
1. Suppose the U.S. equilibrium price of beef is $2 per kilo and Japan equilibrium price of beef is $4 per kilo; international equilibrium would be established by A. The intersection of U.S. excess supply and Japan excess demand of beef. B. The intersection of Japan excess supply and U.S. excess demand of beef. C. The intersection of U.S. and Japan excess supply of beef. D. The intersection of U.S. and Japan excess demand of beef. 2. Other things being...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD = 24 - P The supply of tomatoes to the United States from Mexico is QS = 6 + P The units are million boxes and U.S. dollars per box One U.S. dollar buys 10 Mexican pesos 1. Draw a graph showing clearly the quantity of US imports of tomatoes from Mexico and their price in dollars 2. There is free trade in tomatoes...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD = 24 - P The supply of tomatoes to the United States from Mexico is QS = 6 + P The units are million boxes and U.S. dollars per box One U.S. dollar buys 10 Mexican pesos Draw a graph showing clearly the quantity of US imports of tomatoes from Mexico and their price in dollars. [Insert an image of your graph here] There...
Question 13 1. Suppose that goods in a foreign country seem cheap from a domestic country...
Question 13 1. Suppose that goods in a foreign country seem cheap from a domestic country perspective. This means that, a. the domestic currency is relatively weak and the real exchange rate for the domestic currency is less than 1 b. the domestic currency is relatively weak and the real exchange rate for the domestic currency is greater than 1 c. the domestic currency is relatively strong and the real exchange rate for the domestic currency is less than 1...
QUESTION 9 Assume that the yen is selling at a forward discount in the forward-exchange market....
QUESTION 9 Assume that the yen is selling at a forward discount in the forward-exchange market. Then, most likely a. interest rates are higher in Japan than in the United States. b. this currency is gaining strength in relation to the dollar. c. interest rates are declining in Japan. d. this currency has low exchange-rate risk. QUESTION 10 America has run a trade deficit with UK for several years. To eliminate the deficit, the USD must _______ against the British...
Show how each of the following would affect the U.S. balance of payments. Include a description...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT