Practice Problems on Balance of Payments

Classify the following transactions from the U.S. balance of payments perspective:

a. A U.S. tourist travel to Frankfurt and spends 1,000 on bratwurst and beer. He pays with a check drawn on a Tulsa, Oklahoma, bank.

b. Mercedes-Benz sells 400,000 of its cars to a U.S. distributor, allowing 90 days' trade credit until payment is due.

c. A resident in Sun City, Arizona, receives a 4,000 dividend check from a German corporation and deposits it in a local bank.

d. The U.S. Treasury buys 10,000,000 worth of German government bonds paid for with a deposit in a German bank.