Consider each of the hypothetical U.S. Balance of Payments (primary)current accounttransactions shown in (a), (b), and (c) below, identify whether it is an Export, Import, Factor Payment (R), or Unilateral Transfer (U).And whether it represents a payment inflow or payment outflow.

Then, for each of the balancingfinancial accounttransactions, shown in (a)', (b)', and (c)' below, identify:

(i)If the transaction corresponds to theU.S. Assets Abroad accountor to theForeign Assets in U.S.(U.S. Liabilities to Foreigners) account; and

(ii)If the transaction represents a payment inflow or payment outflow.Remember, in the U.S. assets abroad account, an acquisition of a foreign asset is an outflow; a sale of a foreign asset, an inflow.In the Foreign assets in U.S. (U.S. liabilities to foreigners) account, a purchase of a U.S. asset by a foreign entity is an inflow; a sale of a U.S. asset by a foreign entity, an outflow.

(a)A German importer purchases a $4000 case ofU.S. wine from a distributor.

Answer:Export; payment inflow

(a)For payment, a U.S.bank makes a $4000 loan to the German wine importer.

Answer:U.S. Assets abroad . (Foreign liabilities to U.S.);payment outflow

(c)A German university student studying in New York deposits at a local U.S. bank a $10000 U.S. bank check received from her parents living in Munich..

Answer:

(c')To make payment (on the $10000 check, of course), the German bank draws down $10000 from its account at a bank in the U.S.

Answer:

(d)Compute the current account balance.

Answer:

(e)Compute the financial account balance.