Identify if the following transactions generates a credit or a debit in the American balance of payments accounts. Explain how each transaction would be classified (current account, capital account, or financial account). Explain whether it constitutes as a cash outflow or a cash inflow in the American balance of payment accounts,

a) An American computer manufacturer purchases $50 hard disk from a Malaysian company,
Answer: Debit, Current account (U.S. good import), cash outflow of $50 [EXAMPLE]

b) An U.S. tourist to Japan sells his iPod to a local resident worth $100.

c) The U.S. central bank sells $500 million of its holdings of U.S. Treasury bonds to a British financial firm.

d) A French owner of Apple shares receives $10,000 in dividend payments.

e) Germany provides research grants to American scientist to work on vaccine research

f) The U.S. government forgives a $50 million debt owed by a developing country.

Answer rating: 100% (QA)

a An American computer manufacturer purchases 50 hard disk from a Malaysian company Debit Current account US good import cash outflow of 50The American computer manufacturer purchases 50 hard disk fro... View the full answer