Determining whether the transactions generate a credit or debit in a balance of payment account in the various situations.
Explain how each of the following transactions generates two entries--a credit and a debit--in the American balance of payment accounts, and describe how each entry would be classified:
a. An American buys a share of German stock and is paying by writing a check on an account with a Swiss bank.
b. An American buys a share of German stock and is paying the seller with a check on an American bank.
c. The French government carries out an official foreign exchange intervention in which it uses dollars held in an American bank to buy French currency from its citizens.
d. A tourist from Detroit buys a meal at an expensive restaurant in Lyons, France, paying with a traveler's check.
e. A California winegrower contributes a case of cabernet sauvignon for a London wine tasting.
f. A U.S. owned factory in Britain uses local earnings to buy additional machinery.© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/economics/macroeconomics/determining-whether-the-transactions-generate-a-credit-or-debit-in-a-balance-of-payment-account-in-the-various-situations-1gm
... money flowing out of the US is a debit. (Capital account - private)
c) Money flows out of the US to France, therefore it is a debit. (Capital account - ...