Summarize the major accounts in the balance of trade, and explain how they balance out.
1) (Balance of Payments) The following are hypothetical data for the US balance payments. Use the data to calculate each of the following:
a) Merchandise trade balance
b) Balance on goods and services
c) Balance of current account
d) Financial account balance
e) Statistical discrepancy
Billions of Dollars
Merchandise exports 350.0
Merchandise imports 2,425.0
Service exports 2,145
Service imports 170
Net income and net transfers 221.5
Change in US- owned assets abroad 245.0
Change in foreign-owned assets in US 100.0
2) (Balance of Payments) Explain where the US balance of payments an entry would be recorded for each of the following:
a) A Hong Kong financier buys some US corporate stock.
b) A US tourist in Paris buys some perfume to take home.
c) A Japanese company sells machinery to a pineapple company in Hawaii.
d) US farmers gave food to starving children in Ethiopia.
e) The US Treasury sells a bond to a Saudi Arabian prince.
f) A US tourist flies to France on Air France.
g) A US company sells insurance to a foreign firm.