Describe how each of the following transactions aects the U.S. Current Account, the Finan- cial Account, and the Capital Account. For the ?nancial account, simple describe whether the transaction results in an increase in net foreign assets, a decline in net foreign assets, or none. Recall that each transaction gives rise to two entries in the Balance-of-Payments Accounts. e.g. of a transaction: US exports 2,000,000 dollars worth of computers to Mexico. Mexico pays in US dollars answer: Current account increases by 2,000,000 (the trade balance of the current account), and net foreign assets rise by 2,000,000 (higher US dollar reserves). 4. An American company sells a subsidiary in the United States and with the proceeds buys a French company. 5. A billionaire from Russia enters the United States on an immigrant visa (that is, upon entering the United States she becomes a permanent resident of the United States.) Her wealth in Russia is estimated to be about 2 billion U.S. dollars 6. A group of American friends travels to Costa Rica and rents a vacation home for $2,500. They pay with a U.S. credit card. 7. The United States forgives debt of $500,000 to Nicaragua 8 The United States sends medicine, blankets, tents, and nonperishable food worth 400

million dollars to victims of an earthquake in a foreign country