ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Show how each of the following would affect the U.S. balance of payments. Include a description of the debit and credit items, and in each case identify which specific account is affected (e.g., imports of goods and services, IM; exports of assets, EXA; and so on.

a) A U.S. citizen buys a newly issued stock share in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York.

b) An American buys a Japanese car, paying by writing a check on an account with a New York bank.

d) A French firm sells defense equipment to the British government for 250 million pounds in bank deposits.

Please draw a table like i have shown in the sample image (including the arrows indicate the increase or decrease) and explain a bit (if possible can u elaborate a little bit more because i want to understand)

a. A California computer manufacturer purchases a $50 hard disk from a Malaysian company,
paying the funds from a bank account in Malaysia.
Description
Hard disk imported from
Malaysia
Decrease in Malaysian deposits
owned by U.S. firm
BOP Account
CA (↓)
FA (1)
Account (detail) Credit/Debit
-IM (↑), TB (↓) -$50
-IMFA (↓)
+$50
***The purchasing of disk is a debt entry in CA due to import. The reduction in deposits held in
Malaysia decreases the foreign asset held by American is recorded in the FA as a credit entry.
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Transcribed Image Text:a. A California computer manufacturer purchases a $50 hard disk from a Malaysian company, paying the funds from a bank account in Malaysia. Description Hard disk imported from Malaysia Decrease in Malaysian deposits owned by U.S. firm BOP Account CA (↓) FA (1) Account (detail) Credit/Debit -IM (↑), TB (↓) -$50 -IMFA (↓) +$50 ***The purchasing of disk is a debt entry in CA due to import. The reduction in deposits held in Malaysia decreases the foreign asset held by American is recorded in the FA as a credit entry.
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