Question

Consider the following events: • The city of Denver, CO acquired several trams worth $100,000 from...

Consider the following events:

• The city of Denver, CO acquired several trams worth $100,000 from Bombardier, a Canadian transportation company. • US tourists went to Antarctic and spent $50,000 on an Australian cruise ship. • The Bank of Japan increases reserves by buying $100,000 from a US bank. • A Malaysian clothes manufacturer spent $80,000 to acquire a trademark of a US company. • Goldman Sachs received a $200,000 dividend on their investment in the stocks of General Motors. • US-based office of Microsoft outsourced software engineers residing in India for $60,000. • The British division of Barclays bank invests in the US treasury bills worth $75,000. • The University of Florida waived $30,000 tuition for an international student.

a) What is the net of the current account?

b) What is the net of the capital account?

c) What is the net of the financial account?

d) What is the net of the balance of payments?

Homework Answers

Answer #1

a. Net of current account = (-) 240,000 + 0 = (-) 240,000

b. Net of capital account = 0 (no entry provided)

c. Net of financial account = (-) 100,000 + 155,000 = (+) 55,000

d. Net of BoP = (-240,000 - 100,000) + (0 + 155,000) =

(-) 185000

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