Balance-of-payments accounting always involves double entries because the inflow of goods and services is always accompanied by financial outflows and vice versa. For each of the following scenarios, show how both sides of the transaction are recorded in the balance of payments.
a. A U.S. tourist goes to Mexico and pays for the trip with funds previously held in a Mexican bank account. (Assume that the value of the trip is $5,000.)
b. The U.S. government gives $1,000,000 in foreign aid to Iraq.
c. Kodak, a U.S. company, sells photographic film in Europe and receives €50,000 in exchange. (Assume that the exchange rate is $1 = €1.)
d. Kodak exchanges the €50,000 received in the previous transaction for dollars at the Federal Reserve Bank of New York.
e. A French investor sells $200,000 worth of stock in a U.S. company and puts the proceeds into a bank in the United States.