How are the following transactions entered into the U.S. balance of payments?
(a) The U.S. government sends $2,000 worth of food aid to Africa.
(b) A U.S. firm exports $10,000 worth of goods to the United Kingdom, payable in 3 months.
(c) A U.S. tourist in Amsterdam spends $200 for food and hotels.
(a) The United States debits unilateral transfers for $2,000 and credits merchandise exports, also in its current account, for $2,000.
(b) The United States credits merchandise in its current account for $10,000 and debits its short-term capital account for $10,000.
(c) The United States debits the service category (travel) of its current account for $200, and credits its capital account (an increase in foreign holdings of U.S. assets or claims on the United States) for $200.
You might also like to view...
Which of the following is likely to happen if investors in an economy become optimistic following the discovery of huge mineral reserves?
A) Unemployment will increase. B) Consumption will increase. C) Real wages will fall. D) Prices will fall.
Define the tragedy of the commons. Give three examples of common pool resources. Briefly explain why common pool resources are subject to overuse
What will be an ideal response?