Chap 3 Questions 10 15
10.Classifying Transactions. Classify each of the following as a transaction reported in a subcomponent of the current account or of the capital and financial accounts of the two countries involved:a.A U.S. food chain imports wine from Chile: Debit to U.S. goods part of the current account, credit to Chilean goods part of the current account.
b.A U.S. resident purchases a euro-denominated bond from a German company: Debit to U.S. portfolio part of the financial account; credit to German portfolio of the financial account.
c.Singaporean parents pay for their daughter to study at a U.S. university: Credit to U.S. current transfers in the current account; debit to Singapore current transfers in the current account.
d.A U.S. university gives a tuition grant to a foreign student from Singapore: If the student is already in the United States, no entry will appear in the balance of payments because payment is between U.S. residents. (A student already in the United States becomes a resident for balance of payments purposes.) If the student is still in Singapore, it would be a debit to the U.S. current transfers in the current account; credit to Singapore current transfers in the current account.
e.A British company imports Spanish oranges, paying with eurodollars on deposit in London: A debit to the goods part of Britain’s current account; a credit to the goods part of Spain’s current account.
f.The Spanish orchard deposits half the proceeds in a eurodollar account in London: A debit to the income receipts/payments of the British current account; a credit to the income receipts/payments of the Spanish current account.
g.A London-based insurance company buys U.S. corporate bonds for its investment portfolio: A debit to the portfolio investment section of the British financial accounts; a credit to the portfolio investment section of the U.S. balance of payments.
h.An American multinational enterprise buys insurance from a London insurance broker: A debit to the
b.A U.S. resident purchases a euro-denominated bond from a German company: Debit to U.S. portfolio part of the financial account; credit to German portfolio of the financial account.
c.Singaporean parents pay for their daughter to study at a U.S. university: Credit to U.S. current transfers in the current account; debit to Singapore current transfers in the current account.
d.A U.S. university gives a tuition grant to a foreign student from Singapore: If the student is already in the United States, no entry will appear in the balance of payments because payment is between U.S. residents. (A student already in the United States becomes a resident for balance of payments purposes.) If the student is still in Singapore, it would be a debit to the U.S. current transfers in the current account; credit to Singapore current transfers in the current account.
e.A British company imports Spanish oranges, paying with eurodollars on deposit in London: A debit to the goods part of Britain’s current account; a credit to the goods part of Spain’s current account.
f.The Spanish orchard deposits half the proceeds in a eurodollar account in London: A debit to the income receipts/payments of the British current account; a credit to the income receipts/payments of the Spanish current account.
g.A London-based insurance company buys U.S. corporate bonds for its investment portfolio: A debit to the portfolio investment section of the British financial accounts; a credit to the portfolio investment section of the U.S. balance of payments.
h.An American multinational enterprise buys insurance from a London insurance broker: A debit to the