Answer questions 1

(a) through 1 (c) using example 3.1. (a) Prepare the balance of payments in a good form.

(b) Does the country have a balance-of-payments deficit or surplus?

(c) How can the country account for this payments imbalance?

Example 3.1 (a) An American company sells $30,000 worth of machinery to a British company (earn foreign exchange); (b) an American woman visits her husband in Japan. She cashes $5,000 worth of US traveler's checks at a Japanese hotel and spends the $5,000 in Japan before returning to the United States (expend foreign exchange); (c) the US Red Cross sends $20,000 worth of flood-relief goods to Chile (expend foreign exchange); (d) an American purchases $5,000 worth of French bonds (expend foreign exchange); and (e) a US bank lends $10,000 to a Canadian firm for 90 days (expend foreign exchange).