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

(b)A U.S. tourist spends $6000 on room and board in Germany.(Note:spending by U.S. nationals on tourism abroad is recorded as an import of a service; foreign tourism expenditures in U.S. are recorded as exports of a service.)

Answer:

(b)To make payment, the tourist's bank in the U.S. draws down its deposits at a bank in Germany by $6000.

Answer: