Type
Essay
Pages
12 pages
Word Count
870 words
School
NY
Course Code
EED

Bad

January 9, 2021
Session 2: Balance of Payments
Global Financial Management
Meng Gao
School of Business, University of Connecticut
Quiz: Current account transfers
What happens to France’s BOP if
LMVH, a French luxury goods company, buys €1.5M of
consulting services from a British subsidiary of BCG
LMVH pays by writing a check on its € bank account at
Societè Generale in Paris, and BCG deposits the check
at Banque Paribas, also in Paris
rules
Quiz
In the latter half of the 1980s, with a strong yen, Japanese firms
A) faced difficulty exporting.
B) could better afford to acquire U.S. assets that had become
less expensive in terms of yen.
C) financed a sharp increase in Japanese FDI in the United
States.
D) all of the options
Summary of BOP Accounting
The BOP sub-accounts from the U.S. point of view
Debits (-) Credits (+)
Imports to the U.S. Exports from the U.S.
Payment by the U.S. of dividends and interest to foreigners Receipt by the U.S. of dividends and interest from foreigners
Capital Outflows Capital Inflows
Increase in U.S. ownership of foreign assets Increase in foreign ownership of U.S. assets
Decrease of foreign ownership of U.S. assets Decrease in U.S. ownership of foreign assets
Increase in Official reserves of the Federal Reserve Decrease of official reserves of the Federal Reserve
IA. CURRENT ACCOUNT TRADE BALANCE
IB. CURRENT ACCOUNT INVESTMENT INCOME
II. Financial ACCOUNT
III. The Official Reserves Account

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