Identify whether each of the following items creates a surplus item or a deficit item in the current account of the U.S. balance of payments.

a. A Central European company sells products to a U.S. hobby-store chain.

b. Japanese residents pay a U.S. travel company to arrange hotel stays, ground transportation, and tours of various U.S. cities, including New York, Chicago, and Orlando.

c. A Mexican company pays a U.S. accounting firm to audit its income statements.

d. U.S. churches and mosques send relief aid to Pakistan following a major earthquake in that nation.

e. A U.S. microprocessor manufacturer purchases raw materials from a Canadian firm.

Short Answer

Expert verified

(a) A central European enterprise supplying items with a Us enthusiast group.

(b) A surpluses entry from the Us balance of payments checking account.

(c) A surpluses entry for the Us public finances checking account

(d) A seismic action inside this countries resulting in either a balance of payments for the Us public finances.

(e) Business delivers building resources to a semiconductor manufacturing.

Step by step solution

01

Introduction

Every cash flow of an organization tracks its achievement over such a particular timeframe, mainly three months. This financial report, also defined as a books of accounts or a net earnings, is also one of three documents used to establish a profit margin.

02

Given Information (a)

Checking account gains and deficit for the Us public expenses.

03

Explanation (a)

a. Instead a central European enterprise manufacturing commodities with only a US enthusiast movement leads to an imbalance.

04

Given Information (b)

Japanese tax payers pay a booking as in United States to book accommodation, road freight, and trips at destinations including New York, Chicago, and Orlando.

05

Explanation (b)

b. Japanese individuals hiring a U.S. tourism business to book accommodation, overland travel, and visits of many U.S. cities, including New York, Chicago, and Orlando, result in a surpluses entry from the Us balance of payments checking account.

06

Given Information (c)

A Mexican company will to audit business tax data, retain such finance team as in United States.

07

Explanation (c)

c. Any Mexican enterprise company engages one Us accountant to audit its financial information produces a surpluses entry for the Us public finances checking account.

08

Given Information (d)

Event of a serious tremor in Pakistan, churches and synagogues as in United States already sent emergency supplies towards the region.

09

Explanation (d)

d. Emergency aid sent in to Pakistan by American religious buildings as in aftermath of a seismographic event in the many territories, results whether in a US federal macroeconomic shortfall finances.

10

Given Information (e)

A Canadian business provides building resources with a Us processor manufacturing.

11

Explanation (e)

e. Another Canadian business delivers building resources to a semiconductor manufacturing.

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Most popular questions from this chapter

On Wednesday, the exchange rate between the Japanese yen and the U.S. dollar was \(0.010 per yen. On Thursday, it was \)0.009. Did the dollar appreciate or depreciate against the yen? By how much, expressed as a percentage change?

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Determine if each of the following items results in a surplus or deficit in the current account of the balance of payments.

a. A Central European corporation offers products to a chain of hobby stores in the United States.

b. Japanese citizens pay a U.S. travel agency to arrange hotel accommodations, ground transportation, and tours of many U.S. cities, including New York, Chicago, and Orlando.

c. A Mexican corporation hires an accounting firm in the United States to audit its financial accounts.

d. Following a severe earthquake in Pakistan, churches and mosques in the United States contribute humanitarian aid to the country.

e. A Canadian corporation supplies raw materials to a US microprocessor maker.

Assume that indicators of improved economic conditions in Japan prompt overseas investors to begin lending to the Japanese government and enterprises. What impact would this have on the yen market? How should Japan's central bank, the Bank of Japan, react to this occurrence in order to maintain the yen's value?

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