1. The double-entry principle in the balance-of-payments How will the following transactions affect the U.S. balance-of-payments? For each transaction in the following table, indicate in which U.S. account it appears as a credit and in which account it appears as a debit. Transaction Account with Credit Account with Debit A Saudi Arabian oil company purchases $1 million worth of U.S. government bonds from a hd v U.S. bank, paying from its account held with the bank. Brandon, a U.S. resident, pays $5,000 from his checking account held in the United States w w to buy shares of stock issued by a German company. Xavier, a U.S. resident, receives 500,000 in dividend payments on shares that he holds in v w a Japanese company, which are deposited in his account in a Japanese bank. 2. Looking at credits and debits The following table shows the value of credits and debits in four balance-of-payments accounts in the fictional economy of Gamros. Debits Credits Balance-of-Payments Account (Billions of dollars) (Billions of dollars) Merchandise 20 35 Services 35 10 Income Receipts 5 10 Unilateral Transfers 55 25 Total 115 80 Based on the total values of Gamros's debits and credits, there is "% money flowing out of Gamros to foreign countries than there is flowing into Gamros. This means that Gamros has a deficit in the W account. Complete the following table based on the credits and debits presented in the previous table. Size of Deficit or Deficit or Surplus Term How to Calculate Surplus (Billions of dollars) Current Account v :l Balance Balance-of-Payments (Billions of dollars) Current Account U.S. merchandise exports U.S. merchandise imports Merchandise trade balance U.S. service exports U.S. service imports Services balance Goods and services balance Net investment income from abroad Net unilateral transfers Current account balance Capital and Financial Account Change in U.S.-owned assets abroad Change in foreign-owner assets in the U.S. Capital and financial account balance Statistical discrepancy Trade balance +55 -77 v +70 _ +35 +13 -2 -8 v -40 +42 v -5