If a U.S. non-profit makes a large gift to an Israeli agency, how is it handled in the balance of payments?
What will be an ideal response?
Answer: The gift is handled as an import of goodwill. If a domestic non-profit gives a gift to a foreign agency, the value of the gift is a debit (an import of goodwill) and the value of the gift is a credit on the domestic balance of payments because it results in receipt of funds from foreigners.
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