Question 1 (20pts)Describe how each of the following transactions affects the U.S. Balance of Payments. (Recallthat each transaction gives rise to two entries in the Balance-of-Payments Accounts.)(a) A French consumer imports American jeans and pays with a check drawn on a U.S.bank in Philadelphia.(b) An American company sells computer software to Costa Rica and receives a moneyorder of $120,000.(c) A citizen from Italy enters the United States on an immigrant visa (that is, uponentering the United States she becomes a permanent resident of the United States).Her wealth in Italy is estimated to be about 1.5 billion U.S. dollars.(d) Frank Rogers, of Durham, buys 2,300.00 dollars of stocks from the German car makerBMW, from Citibank New York, paying with U.S. dollars.(e) An American company sells a subsidiary in the United States and with the proceedsbuys a Romanian company.(f) The United States forgives debt of $3,200,000 to Canada.(g) An American family travels to Mallorca and rents a boat for $1,500 for a week. Theypay with a U.S. credit card.(h) New Orleans residents receive medicine, blankets and tents worth 7 million dollars fromAustralia for help over hurricane.

The objective of the question is to understand how each of the given transactions affects the U.S.…

Answered: Question 1 (20pts) Describe how each of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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points) possible Dinotopia's Balance of Payments Account, 2014 (billions of S) CURRENT ACCOUNT Exports of products and services Imports of products and services Net investment/labour/transfer income FINANCIAL ACCOUNT Dinotopian investments in R.O.W. R.O.W. Investments in Dinotopia 594 -534 30 - 117 116 The table shown above has selected data from Dinotopia's 2014 Balance of International Payments. From these data it can be determined that in 2014 Dinotopia had a O A. financial account balance of $1 billion. OB. current account balance of $10 billion. C. current account balance of $624 billion. O D. current account balance of $60 billion.
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1. What is the exchange rate between the U.S. and Germany? Has there been appreciation or depreciation of the U.S. dollar relative to Germany's currency? 2. As a manager, how does this affect your decision to expand into Germany? Will it affect your costs or ability to produce in Germany? 3. Would you recommend your firm expand into Germany? If so, would you produce the product/service in Germany? Would you expand to sell the product/service to a new target market? If you don’t think your firm should expand into Germany, why?
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