international Economics
Chapter 13: Problem 3a,b,c,d,f (p.339 of textbook)
(International Economics: Theory and Policy, 10th edition by Krugman, Obstfeld, and Melitz)
This is the Textbook.
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Explain how each of the following transactions generates two entries – a credit and a debit – in the American Balance of Payments Accounts, and describe how each entry would be classified.
(a) An American buys a share of German stock, paying by writing a check on an account with a Swiss Bank.
(b) An American buys a share of German stock, paying the seller with a check on an American Bank
(c) The Korean government carries out an official foreign exchange intervention in which it uses dollars held in a American Bank to buy Korean currencies from its citizens.
(d) A tourist from Detroit buys a meal at an expensive restaurant in Lyons, France, paying with a traveler’s check.
(f) A U.S.-owned factory in Britain uses local earnings to buy additional machinery.

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