Question

3. Consider two fictional economies, one called the domestic country and the other the foreign

country. Given the transactions listed in (a) through (g), construct the balance of payments for

each country. If necessary, include a statistical discrepancy.

a. The domestic country purchased $120 in oil from the foreign country.

b. Foreign tourists spent $35 on domestic ski slopes.

c. Foreign consumers purchased $50 of wine from our domestic wineries.

d. Domestic investors were paid $25 in dividends from holdings of foreign equities.

e. Foreign investors were paid $20 in dividends from their holdings of domestic equities.

f. Domestic residents gave $15 to foreign charities.

g. Domestic businesses borrowed $60 from foreign banks.

h. Foreign investors purchased $15 of domestic government bonds.

i. Domestic investors purchased $50 of foreign government bonds.

Answer 1