Answer to Question #150313 in Macroeconomics for Kane

Question

Identify whether each transaction would be classified in the current account or the capital and financial account in a nation’s balance of payments, and would it be listed as a credit or a debit for the US.:
A) Honda pays $5 million to an American shipping company to transport goods to other countries
B) Americans increase purchases of products from Sony, a Japanese electronics company.
C) Ford purchases a factory in Mexico
D) Mr. McRitchie buys a vacation home in Greece and plans on using Airbnb to make some money off of it renting it out
E) Benny Batson, a US citizen, makes money off of his foreign investments
F) The U.S. government sends foreign aid out to Israel due to conflict within the country

Answer 1

A) Honda pays $5 million to an American shipping company to transport goods to other countries ( financial account)

B) Americans increase purchases of products from Sony, a Japanese electronics company.( current account)

C) Ford purchases a factory in Mexico ( financial account)

D) Mr. McRitchie buys a vacation home in Greece and plans on using Airbnb to make some money off of it renting it out ( financial account)

E) Benny Batson, a US citizen, makes money off of his foreign investments (current account)

F) The U.S. government sends foreign aid out to Israel due to conflict within the country ( financial account)