$1.$ Do all international financial transactions necessarily involve exchanging one nations distinct currency for another? Explain. Could a nation that neither imports goods and services nor exports goods and services still engage in international financial transactions?

$2.$Explain: U$.$S$.$ exports earn supplies of foreign currencies that Americans can use to finance imports. Indicate whether each of the following creates a demand for or a supply of European euros in foreign exchange markets: $*$

a$)$U$.$S$.$ airline firm purchases several Airbus planes assembled in France$*$

b$)$A German automobile firm decides to build an assembly plant in South Carolina.$*$

c$)$A U$.$S$.$ college student decides to spend a year studying at the Sorbonne in Paris.$*$

d$)$An Italian manufacturer ships machinery from one Italian port to another on a Liberian freighter.$*$

e$)$The U$.$S$.$ economy grows faster than the French economy.$*$

f$)$A U$.$S$.$ government bond held by a Spanish citizen matures, and the loan amount is paid back to that person$*$

g$).$It is widely expected that the euro will depreciate in the near future.

$3.$What do the plus signs and negative signs signify in the U$.$S$.$ balance$-$of$-$payments statement? Which of the following items appear in the current account and which appear in the capital and financial account: U$.$S$.$ purchases of assets abroad, U$.$S$.$ services imports, foreign purchases of assets in the United States, U$.$S$.$ goods exports, U$.$S$.$ net investment income? Why must the current account and the capital and financial account sum to zero?

$4.$Exports pay for imports. Yet in $2021$ the nations of the world exported about $$861$ billion more of goods and services to the United States than they imported from the United States. Resolve the apparent inconsistency of these two statements.