CONSIDER EACH OF THE HYPOTHETICAL U.S. BALANCE OF PAYMENTS (PRIMARY) TRANSACTIONS BELOW. FOR EACH ONE, IDENTIFY WHETHER IT IS A CURRENT OR FINANCIAL ACCOUNT TRANSACTIONS. AND WHETHER IT REPRESENTS A PAYMENT INFLOW OR OUTFLOW.
Consider each of the hypothetical U.S. Balance of Payments (primary) transactions below.For each one, identify whether it is a current or financial account transactions. And whetherit represents a payment inflow or outflow.A U.S. importer buys a case of Spanish wine for $1000.A U.S. citizen working for a firm in Germany deposits her $2000 paycheck, drawn on a Frankfurtbank, into her U.S. checking account.A German citizen purchases $100,000 worth of Google shares of stock.A Salvadoran immigrant in Los Angeles sends a $5000 check back to his family in San Salvador.So what is the current account balance?Note: to answer this question, it might help to fill in the Table below from thetransactions above, placing the letter of the transaction next to the appropriate entry.Note: one of the transactions is not a current account transaction.InflowsOutflowsExportsImportsFactor Payments(R)Unilateral Transfers (U)_______________________________________________________________________SumCurrent Account Balance2.The Table below provides hypothetical data on macroeconomic accounts for three countriesrepresented by A, B, and C, and measured in billions of currency units. S = private householdsaving; T = taxes; G= government spending; and I = investment.Calculate the Current Account balance for each country. (Remember, the current account balance = X – M; i. e., it is the negative of (M – X).)State whether each nation has a current account surplus or deficit.Identify this nation’s demand for financial capital. (Remember the Chapter 10 formulation:demand for financial capital = supply of financial capital. See chapter or Week 4 slide. )STGI3.A70000060008000B5000500035004000B5000500065004500Some years ago a critic of what economists were saying about the U.S.’s international tradeposition argued that it was essential that the U.S. as a country should run a trade surplus andmaintain a healthy positive net inflow of foreign financial capital from abroad. If you wereasked to comment, what would you say?