For each of the following transactions, indicate how it would be classified in t
ID: 1119057 • Letter: F
Question
For each of the following transactions, indicate how it would be classified in the US balance of payments.
1. A foreign company buys an American-made airplane.
2. An American family stays in a hotel in a European city.
3. A Canadian citizen crosses the border each day to work at a job in the United States.
4. An American citizen spends six months working in Dubai.
5. An Japanese auto company makes a profit from an assembly plant that it owns in the United States...
6. … and uses those profits to pay for an expansion of the plant.
7. An American pharmaceutical company receives royalty payments for a drug it has a patent on from an Indian manufacturer.
8. The Chinese central bank increases its foreign exchange reserves by buying Treasury bonds from an American bank.
Use the options below to answer each question above:
a. Export of goods
b. Export of services
c. Import of goods
d. Import of services
e. Income paid
f. Income received
g. Outward direct investment
h. Outward portfolio investment
i. Inward direct investment
j. Inward portfolio investment
k. not counted
(It would be very helpful if you can explain the answers, thank you!)
Explanation / Answer
1) The answer is Export of goods.
because an American made aeroplance has been purchased by a foreign company thus it is an export of good. when the good is purchased from foreign member , it acts as a exports.
2) Income paid. becasue, the income is been paid to European city by an american family who stay in hotel.
3) Import of services. because the canadian cititzen is working in U.S and crosses the border every day. thus it is an import of services.
4) Export of services.
5) inward direct investment.
6) inward portfolia investment.
7) income recieved.
8) not counted.
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