HW questions on balance of payments for an international finance class

1.(25 points) Use the following information to answer the questions below. Show your work. Net unilateral transfers -50 billion USD Exports of goods and services 500 Net increase in the U.S. government non-reserve foreign assets 30 Net increase in foreign ownership of U.S.-based non-reserve assets 400 Net increase in U.S. private assets abroad 250 Investment income received in the U.S. 200 Net increase in U.S. ownership of official reserve foreign assets 20 Imports of goods and services 600 Net increase in foreign ownership of U.S.-based reserve assets 100 Investment income paid abroad by the U.S. 300 a.What is the current account balance? Is it deficit or surplus? b.What is the financial and capital accounts (please combine two accounts) balance? Is it deficit or surplus? c.What is the statistical discrepancy? 2.(55 points) Look at each of the cases below and determine whether each transaction would be classified under the U.S. current account, financial, or capital account, and state whether it would enter as a credit or debit. The U.S. government sells gold for dollars. The Federal Reserve purchases pound sterling foreign reserves in Britain.A California computer manufacturer purchases a $50 hard disk from a Malaysian company.A foreign owner of Apple shares deposits $10,000 in dividend payments into a New York bank.The U.S. government forgives a $50 million debt owed by a developing country.The Mexican government sells pesos to the U.S. Treasury and buys dollars.A Japanese automobile firm builds an assembly plant in Kentucky.A U.S. college student spends a year studying in Switzerland.American charities donate food to people in drought-plagued Africa. Lloyds of London sells an insurance policy to a U.S. business firm.A Swiss resident receives dividends on her IBM stock.
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Homework 3
1.
Due: April 2, 2020
(25 points) Use the following information to answer the questions below. Show your work.
Net unilateral transfers
-50 billion USD
Exports of goods and services
Net increase in the U.S. government non-reserve foreign assets
500
30
Net increase in foreign ownership of U.S.-based non-reserve
assets
Net increase in U.S. private assets abroad
400
Investment income received in the U.S.
200
Net increase in U.S. ownership of official reserve foreign assets
250
20
Imports of goods and services
600
Net increase in foreign ownership of U.S.-based reserve assets
100
Investment income paid abroad by the U.S.
300
a.
What is the current account balance? Is it deficit or surplus?
b. What is the financial and capital accounts (please combine two accounts) balance? Is it
deficit or surplus?
c.
What is the statistical discrepancy?
2. (55 points) Look at each of the cases below and determine whether each transaction would
be classified under the U.S. current account, financial, or capital account, and state whether it
would enter as a credit or debit.
a. The U.S. government sells gold for dollars.
b. The Federal Reserve purchases pound sterling foreign reserves in Britain.
c. A California computer manufacturer purchases a $50 hard disk from a Malaysian
company.
d. A foreign owner of Apple shares deposits $10,000 in dividend payments into a New York
bank.
e. The U.S. government forgives a $50 million debt owed by a developing country.
f. The Mexican government sells pesos to the U.S. Treasury and buys dollars.
g. A Japanese automobile firm builds an assembly plant in Kentucky.
h. A U.S. college student spends a year studying in Switzerland.
i. American charities donate food to people in drought-plagued Africa.
j. Lloyds of London sells an insurance policy to a U.S. business firm.
k. A Swiss resident receives dividends on her IBM stock.

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