3. Indicate how the following transacationis entered into the U.S. balance of payments with double-entry bookkeeping:

(a) The U.S. governement gives $100 worth of food aid to a developing nation

(b) What is the difference in their effect on the balance of payments between transaction (a) in this problem, on the one hand, and the net result of transactions (a) and (b) in Problem 2, on the other hand?

Note: Problem 2:

Idicate how each of the following internaional transactions is entered into the U.S. balance of payments with double-entry bookkeeping:

(a) The U.S. government gives $100 cash balance in a U.S. bank to a developing nation as part of the U.S. foreign aid program.

Answer: Debit: Unilateral exchanges $100, Credit: Capital outflows 100

(b) The developing nation uses the $100 bank balance to import $100 worth of food from the United States.

Answer: Debit: Capital inflows $100, Debit: U.S. exports 100