You have been appointed policy advisor of the country Economia. The country is an open economy, has
Question:
You have been appointed policy advisor of the country Economia. The country is an open economy, has a floating exchange rate regime, and uses the Econ as its currency.
The government is unsure how to record some international transactions in the Balance of Payment. Show (using the credit/debit tables) how each of the following transactions should be recorded in Economia’s Balance of Payments.
You should specify the account that is affected and the accompanying credit/debit entry.
a. A company in Economia buys a patent from a German company for 1 million Econs.
b. A French worker living and working in Economia sends 500 Econs worth of Economia’s wine to his family in France.
c. A foreign lender forgives 1 million Econs worth of Economia’s debt.
d. A German engineer receives 1,000 Econs for services provided to a company in Economia.
Macroeconomics
ISBN: 978-1464168505
5th Canadian Edition
Authors: N. Gregory Mankiw, William M. Scarth