Reference no: EM132438387
Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:
(1) A Japanese insurance company purchases U.S. Treasury bonds and pays out of its bank account kept in New York City.
(2) A U.S. citizen consumes a meal at a restaurant in Paris and pays with her American Express card.
(3) An Indian immigrant living in Los Angeles sends a check drawn on his L.A. bank account as a gift to his parents living in Mumbai.
(4) A U.S. computer programmer is hired by a British company for consulting and gets paid from the U.S. bank account maintained by the British company.
Answer:
Transactions
Credit Debit
Japanese purchase of U.S. T bonds
Japanese payment using NYC account
U.S. citizen having a meal in Paris
Paying the meal with American Express
Gift to parents in Bombay
Receipts of the check by parents (goodwill)
Export of programming service
British payment out of its account in U.S.